A Byte of my 2.2-lb Brain

Just sharing stuff…

Time Deposit

Like I said in my previous post, I’m going to discuss some investment vehicles in this blog.

Most of us from the Philippines are more familiar with Time Deposit (TD) as an investment vehicle. Placing your money in a time deposit is advantageous especially if you are after the security and stability of your savings and earnings; the Philippine Deposit Insurance Corporation insures your stakes. Another advantage of TD is that you have a fixed earning depending on the amount of time you are willing to invest your money. The longer you invest your money in a time deposit, the better it is for your stake.

The key is to look for banks that give high annual percentage yields (APY). TD is perfect especially if you want to develop the patience and discipline in salting away your future because banks have the leverage to inflict economy-sized sanctions on you if you infract your agreed terms.

Anyway, below are the latest APYs that the different banks and account types offer. Study them carefully and know which suits you best.

A Caveat: Inflation Rate

I do not normally recommend this investment vehicle to friends. 🙂 One important aspect that one should realize in saving and investing their money is the inflation rate. The inflation rate essentially quantifies the “value” of your “money”. For example, if the inflation rate of the country is 3.9% annually, then a ₱20 Cornetto ice cream will cost ₱20.78 in a year. Now, if the growth of your money is slower than that, say an APY of 2.00%, that same ₱20 bill you had that could have gotten you a Cornetto ice cream will now be ₱0.38 short in a year because it’s only grown to ₱20.40.

F.Y.I. The inflation rate of the Philippines in January 2012 was 3.9%. The average inflation rate of the country in the last five years, 2007-2011, is 4.78%. Investing in a mutual fund might be better for you. 🙂

Think about it. 🙂

3 comments on “Time Deposit

  1. Pingback: Mutual Funds « A Fledgling Iskâ "Techno-Fundamentalist"

  2. newinstocks
    February 16, 2012

    Hi E! How about Special Deposit Accounts? It would be nice if you could also include info about this on your blog. 🙂


    • E
      February 16, 2012

      Hi, newinstocks. Thanks for mentioning the Special Deposit Accounts (SDA). To be honest, I am not very familiar with the instrument. 😉 However, a quick research on the web tells me that SDA is another short-term investment option that is only offered by Bangko Sentral ng Pilipinas (BSP) alone. In terms of risks then, I believe that it is pretty much risk-free since the central bank itself is your “insurer”; although, it’s not covered by the PDIC unlike in TD. In terms of liquidity, one needs to hold the stake until maturity (just like in a TD). In terms of yield, in 2008, it was fluctuating within the 6-6.5% yield. Recently however, the yield has been in its record low of 4%, but still, better than in TD.

      One of the issues here though, at least for me, is the minimum amount of investment needed. Here are the different bank rates I’ve sniffed online (so please verify with the respective banks):

      Banco de oro (BDO), Security Bank and HSBC: P1 million.
      Chinabank: P5 million
      UnionBank: P10 million
      Bank of the Philippine Islands (BPI): P100,000

      I’ll write more on this (hopefully) once I get to chat with someone who’s well-versed in the subject. 🙂


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


This entry was posted on February 10, 2012 by in Investing, Time Deposit and tagged , .
%d bloggers like this: