OFW Investments

Article excerpt

Byline: Fr. Emeterio Barcelon, SJ

FOR the country, OFW remittances are equivalent to positive export trade balance. The multiplier effect of this is as great as if we had exported goods. Some of our neighbors boosted their economies by focusing on exports. The remittances are just as good although we still have to endeavor to have a trade surplus. The remittances are normally intended for subsistence of the families the OFWs left behind. But there are also savings over and above daily needs of the family. The pasalubongs, from chocolate bars to karaokes, are just a small portion of savings, including the festivities of welcoming them home. Even for the non-executives, like seamen and household helpers, some savings, especially for the more thrifty ones, are still available. How to invest these savings to protect them and to make the most out of them is the question. This involves risk and how much risk these savings are capable of taking or should take. Of course, the immediate investment should be a house for the family, ideally bought on installment to allow for adequacy. Next is provision for the education of the children and some protection from unexpected health and accident problems. Savings above this, needs some consideration for investments.

The retail bonds of the national government are ideal because the risk is minimal or none at all. It also protects from getting eaten up by inflation. The next best thing, or sometimes better, are time deposits with rural banks that pay higher rates and the interest can automatically be reinvested at the regular rates. The advantage of this over the national bonds is that it gets to earn at compound interest. These time deposits are guaranteed by the PDIC up to R250,000 so that a family of six can have up to a million and a half fully protected by this government insurance. For those interested in helping their hometown, deposits in the hometown rural bank will help towards this purpose. …