This just in: the central bank has approved the Philippine National Bank’s high-yielding, long-term deposit product. Offer size is P5 billion, and the offer will be made before June. Read the news item here.

The technical term for the instrument is long-term negotiable certificates of deposit. Yep, the alphabet soup is out again. LTNCDs have become another option for bank depositors wanting more returns for their money.

Aside from the following, there are no details yet about the offer:

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Some investors are looking for safer investment havens, after having sat through nauseous market rides in previous months.

Retail bonds might offer less exciting but more stable income, especially for those who are just starting to build their portfolio. However, as with any investment, know first its mechanics and how it can help you diversify your portfolio.

Watch this video of Aboitiz Power CEO Erramon Aboitiz explaining about the company’s P1.5 billion to P3 billion retail bond offering this month.

Most people find stock investing sexy because they are caught up in the excitement of the P1,500-per-PLDT-share shooting up to P3,000 plus in a couple of months. Investors call this “capital gains” or “capital appreciation.”

But when the economy is in a swoon and markets go limp, good old boring dividends become the luster of stocks. Dividends–cash the company sends to shareholders as their share of company earnings–are signs the company is doing good especially if the payouts are regular and they increase consistently through the years.

This doesn’t mean that companies that don’t pay regular dividends are fundamentally weak. Opting for growth by reinvesting earnings into the company instead of sharing them with shareholders is a strategy many great companies like Microsoft used in its early years.
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Maybe around 50 times every year since I started writing about personal finance for newspapers and magazines, people ask me this question: What do I do with P100,000? (or P50,000 or some other amount)

These days, P100,000 can be stretched in every which way especially by us Filipinos. “Stretched” though can have many different meanings! I can give you a short list of things I can BUY with P100,000 and guarantee that in a couple of hours, I will be happily looking at paper bags of baby stuff and home décor!

But no, I am NOT recommending that! The fact that people ask how they can save or invest this amount of money is a good sign. Remember, it’s not the amount that matters especially in the beginning of financial literacy. It’s the discipline and the habit that matters.
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Reader Dupax sent me an email with a question I know most of you are also thinking about:

I’ve been a fan of your MoneySmarts articles ever since I’ve decided to become a financially literate person. I’m an OFW for over a year now. I have two kids, and my wife is taking care of them full-time. I’ve been reading a lot of stuff about mutual funds and I really would like to start investing in it, even if there’s a global financial crisis.

I know I can put my savings in a time deposit right now but I know that there’s a better way of saving it. Instead of putting it in the bank, I’m willing to initially invest P50,000 in mutual funds, UITFs (unit investment trust funda), or other investment vehicles, and then invest P10,000 every month in the period of three years.

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By Aya Laraya, RFP*

With the global financial crisis hitting everyone and so many people losing their shirts, a lot of people are beginning to lose heart and quitting the whole financial planning mindset.  And as lousy as it can be to talk investing when you have just lost your life’s savings, you will only be able to recover from things like this if you develop a sound and coherent plan. How?  By being the one who actually decides where your money goes.  What do I mean by this? Consider the following:

First, ask yourself, how did you arrive at the decision to purchase your last investment?  (Let’s say a pre-need educational plan.)  Did you decide on your own or was it recommended to you? Did you consider other options before deciding on the pre-need plan? (Like stocks, mutual funds, etc.)  What factors made you decide to take that option over the others?  (Risk? Accessibility? Rate of Return? Cost?)

Second, who decided on which provider to buy from?  Did you research who the industry leaders were?  Or was it based on word-of-mouth?  Or on the fact that your friend or relative worked for said provider?
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Long before 2008 drew to a close, people have started writing off 2009 with words such as “worse than 2008”, “depressing”, “bumpy ride” etc.

Is it then still possible to get out of 2009 with a good investment return or is that out of the question and should we all just try to make as little mistake as possible and aim for a boring year of preserving gains?

Specifically, if you are a 20 to 30-something singleton, what do you plan to do this year about your investments? The conventional wisdom for this age group is not to be afraid to take on some risks because there’s plenty of time to recover, but then again, a few are beginning to think about quite the opposite: why take on risks when you have plenty of time to grow your money?
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It’s my pediatrician this time .

“Hi Salve. You know what, I’m keeping my mutual fund investments. After all, I’m investing for the long-term naman eh. As long as the value of my shares don’t go down to zero!,” she said.

This appears to be a common concern among mutual fund investors, who have watched the net asset value per share (NAVPs) of their mutual fund holdings drop to precarious levels this year. Many have decided to stop checking the values every day as the movements make them nervous. Others have decided to withdraw their investments altogether even at a huge loss.
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The year is almost about to end. I’ve been thinking about the top personal finance lessons we can glean from 2008. Here are mine. If you want to share your own lessons, write via the comment section or email me at lightdream (at) gmail (dot) com. I will feature the best ones in my article for Business Monday at the Philippine Daily Inquirer.

1. Crisis-proof your finances. Don’t put too much money in one investment. Diversify. Invest only what you can afford to lose.
2. Plan for the long-term, but revisit your goals regularly.
3. Don’t be too greedy. Know what you’re getting into. If you don’t understand something, ask for plain English explanation and if that doesn’t work, just walk away from it.
4. Live within your means.
5. Money is not everything.

I watched with rapt attention in the last few days as Wall Street reported the arrest of former Nasdaq chairman and veteran money manager Bernard Madoff last Thursday, who has duped a wide range of investors—from a Jewish youth charity in Boston to major banks like HSBC and BNP Paribas, as reported by Associated Press.

The extent of losses is still unknown. As of now, though, the figures are eye-popping. Banco Santander, Spain’s biggest bank, may have a $3-billion exposure. HSBC at $1 billion. Royal Bank of Scotland $98 million. France’s Natixis investment bank, already brought low by subprime losses, $606 million. Japanese financial giant Nomura $303 million and officials in South Korea said financial institutions there a total exposure of some $95 million.

How did he do it? Using the good ol’ Ponzi scheme, says US authorities. That means paying off his investors with unusually large returns, consistently, using money from new investors. As we have already discussed extensively in this blog, this form of scam always ends in tears.
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