Investment professional Alijeffty Gonzales has a simple idea for Filipinos working overseas who want, at the very least, to protect their capital and still get their feet wet in the equities market at the same time.
In his blog post here, he says any OFW can do this by putting at least P13,699 in Landbank’s long-term negotiable certificate of deposit and investing P6,301 for any equities fund of his choice and voila – you have an equity-linked note or ELN. Sounds highfaluting, eh? 
An ELN basically combines a zero-coupon note with an instrument that invests in more volatile (exciting) securities like stocks. As the zero-coupon returns 100% of the face value at maturity, any residual value of the stock portfolio becomes “gravy” at the concurrent reckoning date.
Here’s Jeff’s math:
Scenario 1: On the fifth year, stock market drops to ZERO
Scenario 2 : the stock market is flat (zero growth)
Scenario 3 : The stock market grows by an average of 8.00%
Jeff says:
Looking at the extremes, this portfolio will return 100% of your capital at the worst case scenario and enhance your return to 8.42% at a modest stock market growth, this could be a great opportunity for OFWs who are contemplating to invest in the stock market for the first time.
Here’s MoneySmart’s take: Good for investment beginners, which means most Filipinos, not just OFWs. If you are saving for something that will be happening 5.5 years from now, say you are sending your son or daughter to a university overseas or you will be needing a downpayment for a car or a small house — and you are positive that if you don’t set aside money NOW, there’s a chance you won’t be able to shell it out in the future, then lock in your money Jeff’s way. A 7% return is low but still much better than those offered by some pre-need companies and current time deposit rates.
Plus, I would rather put my money in a government bank that is less likely to fold up than some little-known investment company offering the moon and the stars. Hello PIPC, heh.
(In case you’re wondering, no I don’t have a deposit account in Landbank that will mysteriously grow sinfully big in the near future. Nope, this is not a paid advertisement.)
May 6th, 2008 at 7:40 pm
Hi Ria,
I haven’t explored offshore investments yet but I do save in local banks here and plan to invest in local equity funds when I have enough savings already. I think it’s better that way. Economy here is growing exponentially.
It’s just frustrating that even if you want to invest in the Philippines, it’s not a convenient option.
I have a BPI and HSBC account in the Philippines. I am big fan of BPI but still it’s not convenient to transact with these banks when you are overseas.
May 6th, 2008 at 11:03 am
Hi Nina,
Have you tried Citibank, HSBC and BPI yet? Am not trying to promote any of these banks (well I am a BPI client) but these banks deal with offshore investments so maybe they are more equipped to deal with your dilemma. I did apply with BPI while overseas.
May 6th, 2008 at 1:01 am
Hi, Salve.
Based on the previous posts, you have a lot of readers here who would like to take advantage of investments in the Philippines targeted for OFWs, but who are presently out of the country.
Could anyone there be kind enough to contact someone at Land Bank/HSBC who can confirm if perhaps, by some stroke of genius, a Land Bank official managed to arrange overseas facility for OFW to invest in the plan? This could be your good deed for the year and countless OFWs will be eternally grateful.
Can you relay the information to this blog’s countless OFW followers as a public service?
How about it, Salve?
Thank you.
May 5th, 2008 at 6:12 pm
Ria and Wendy,
That is exactly my problem! For instance, ang mga mutual funds -they want personal apperance for the application. Sa stocks pwede nga ang online trading pero ang inital application kailangan pa rin magsubmit ng paper application. At ang pinaka frustrating eh mga transactions sa bangko. Recently, nag-enrol ako ng third party account (my family’s) for fund transfer. Pwede ka nga mag-enrol online pero kailangan pa rin i-submit yong signed form. Hindi na raw pwede mag submit ng scan copy through e-mail. Sobrang higpit nila to the point na nakakainis na at ayaw mo ng makipag-transact sa kanila.
May 5th, 2008 at 3:46 pm
Right Ria!! OFWs are obviously based overseas and most of us have the chance to go home only once every 6-months (if you’re lucky to be in a good company) or 1-year.
I am an avid reader of articles pertaining to possible investments for OFW. However, that is as far as I can go. I can only read and wish that I am in the Philippines to participate in these offerings.