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.
May 5th, 2008 at 1:52 pm
From what I understand, the May 16 deadline is for the initial public offering. After that you can still buy at the prevailing market rate at the time which means could be higher/lower than the IPO price. Also after the initial trading, the product becomes open to everybody not just the OFWs.
It seems the only way to apply for this Landbank promo is thru Landbank and HSBC (am not sure if HSBC overseas will accept). I just don’t understand why Landbank missed the obvious - that the OFWs are based overseas and may need to transact from (gasp!) overseas. Online application/transaction hello!
May 5th, 2008 at 11:43 am
Thanks guys for the advice! ‘Wag kayong magsasawa at makukulitan =)
@alijeffty- i will definitely visit your blogspot.
@don2x- good question!
“where are they going to invest your money to guarantee a specified return after 8 or 26 years.”
@ACN- yup the cashflow is generally an issue with a breadwinner like me.
@Salve- keep posting! You’re surely doing a great job.
May 5th, 2008 at 7:58 am
people have different time frames when to use money ie., buy car,house, education etc. that makes lending and borrowing money more dynamic.but projecting the cost of money, interest rate as well as inflation for making investment decisions is not that easy for longer periods.investment a with 8-yr waiting period may have different cost of money than investment b having periodic payment for 26 years.for all we know the present values of both scenarios are equal and the deciding factor is just the syncronization of timeline you planned to spend your money plus earnings.using roi by just dividing future value with initial figure is too simplistic since it does not consider the time value of money.maybe a good question to ask is where are they going to invest your money to guarantee a specified return after 8 or 26 years.
May 5th, 2008 at 6:09 am
Hi Tserilu,
i noticed that both options you are considering are “insurance related” proposals? as it is, i would assume that your objective at the moment is to buy protection and if possible combine some investment related benefits?
an alternative approach would be what planners call “buy term-invest the difference”, this is a DIY insurance/investment package, for illustration purposes i have taken the liberty of using some of the data you have provided in a “projection” to show the possible outcome of this approach.
it basically requires that you set aside Php 35K for 11 years, you get covered for Php 1M for 20 years, and if you outlive your 20-year cover, you get Php 1M in cash!
the projection table is posted in my blog: http://www.acgadvisors.blogspot.com
thanks,
May 5th, 2008 at 4:51 am
i like the offer but i do.t have an account in land bank.
please emial me for more emfo.
thanks
May 4th, 2008 at 4:28 pm
which equity fund can I put P6,301? Can you give samples?
May 4th, 2008 at 3:06 pm
Is this program available here in abroad? I mean, could we avail this plan even if we are in the UAE? Thanks.
May 4th, 2008 at 8:06 am
I have the same question and I already asked through Land Bank’s website. In their FAQs about LTNCD, OFW family members can do it for us, but I am not convinced this is a good way and you know the reason why.
May 4th, 2008 at 5:03 am
hi, im interested in the info you posted below, but if i am in new zealand,how can i invest in landbank. Are there ways to invest when you are out of the country.
thanks very much
May 3rd, 2008 at 11:36 pm
@ salve
Alijeffty’s investment advice is perfect for RISK AVERSE individuals. This will also go well with an increasing yearly savings.
May 3rd, 2008 at 11:29 pm
@tseribu
others will ask for more parameters so i’ll let them confuse you.
now, for your question.. I’ll choose investment A since you already have the money and your cashflow will not be affected as much as investment B.
May 3rd, 2008 at 9:07 pm
Hi Salve,
Thank you for sharing this, i hope it would be helpful to your readers
regards
May 3rd, 2008 at 6:00 pm
while we’re at it, i’d like to ask a related question.
which is better an investment:
Investment A:
Pay initial P50 thou
Then wait for its maturity, say at least 8 years
(i think it’s a term investment with insurance)
Investment B:
Pay P20 thou annually for 26 years
(also with insurance)
With return of investment (guaranteed!)
the circumstances: i have more than half of 50thou but the ROI of investment B is so enticing. but im not really sure if i can pay 20thou for 26 years straight!
(btw, if it matters, im in my early 30s)
i know this sounds silly but what are the important questions i need to ask the agent if im serious about getting one.
thanks!!
hope you can help me decide soon =)
May 3rd, 2008 at 11:05 am
Sounds great, but i understand the Land Bank’s LTNCD’s offering will only be until May 16. I’m still overseas working until that time and so will be hundreds of other OFW’s who may want to avail of the offer.
Any other way for us to get it?
May 2nd, 2008 at 7:16 pm
It’s difficult to invest in the Philippines while away. Una, gusto ng mga yan, personal appearance sa Office nila. Tapos ang hirap din i-track. Saka ang hirap talaga kausap ng mga bangko sa Pilipinas - naloloka ako.
For now, I’m saving here in Qatar. Maganda ang economy ngayon kaya maganda ring mag-invest.