How safe is your money? Do you consider your investments safe? To answer those questions you need to first make a clear definition of safety. How would you define money on safety? Many people would consider Time deposit as a safe instrument, cause it would give you guaranteed returns and it is insured by the PDIC (Philippine Deposit Insurance Corporation) making Time deposit as the safest investment. But did you know that even time deposits has its own disadvantages and risks. To explain that consider this.
Let's say you have 100 pesos in your wallet and then the current market price of 4 kilos of rice in 2014 is also 100 pesos. Then you go to one of the top performing bank and deposit your cash of 100. The bank promises you to give you 2 percent simple interest by next year. At the end of the year you've successfully earned 2 pesos on your time deposit account.
Question here is, did you really earn?
To answer that, consider first our country's Inflation rate. Inflation is the rise of market price in our goods and services. Let's say the rate of inflation on that year reach an average of 5%. It means that in 2015 the price of 4 kilos of rice would rise for about 5 pesos making it 105 pesos per 4 kilos. Therefore that the same money that you put in your Time deposit cannot purchase the same kilos of rice. I need also to mention the 20% withholding tax that you need to deduct on your time deposits earning.
In order to maximize your earning potential you need also to check what other instruments are available in the market. Try to approach professional people in the bank or any other financial institutions. Finding the proper instrument is just like canvassing clothing for a special occasion. You search for something that suits your goals, money and quality. You don't wanna search and stick only to 3 stores, sometimes it's best to look at the entire stores available and compare which one is the best. Canvassing an instrument for your money shouldn't be in a hurry it would also take some effort and study. In order to help you find the proper investment vehicles for you, let me show you these:
that's all for now..
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