The one millon peso challenge
One of my immediate long term goals is the start of a 5-year financial building plan or in other words, "pagpapayaman". The goal is to hit one million pesos after 5 years (I would be 30 yo then). To do this, i should be able to save at least P547.95 per day for 5 years. A truly challenging and difficult task especially for an impulsive buyer like yours truly. The solution? Let somebody else handle your finances. I am not talking here of the usual office practice called "paluwagan". What I am thinking is something like securing good interest rates while not having the temptation of spending the capital like typical saving accounts. Two options: time deposit and UITF / Mutual Funds.
When the term "time deposit" takes place, the next set of questions will be: 1. which bank provides better interest rates? , 2. how long is the holding period? , 3. are there any withholding taxes? From my research, present interest rates ranges from 2-3% PA for many commercial bank and little higher for some thrifty and rural banks. The best rate so far is of the PSBanks Prime Time Deposit, with an annual interest rate of 6% and 5-year holding period.
On the otherhand, the next option UITF/Mutual Funds provides interest rates that can go higher than 10% depending on the movement of the market. But the trade-off is that UITF/Mutual funds relies on how good the company you've chosen in managing the funds in investing it in the financial market. The interest rates varies from time to time and other external forces affects the status of the fund. Unlike time deposits, it is not protected by the PDIC.
But before I speak of these intricate investment schemes, I should stick to a basic principle in saving. That is, "increase the income, cut the expenditures". And it all boils on having the will and discipline to achieve these things. "1M for 2012", here i come!