OFW investments

 

 

By 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. There are also local municipal bonds that are being issued to leverage the local government income from their share of the tax revenue. But there are not too many of these but hopefully will be coming with institutions like Ercof trying to help the OFWs to earn at the same time help their kababayans.

Beyond time deposits and bonds, the risks become greater but the returns can also be greater. Half of these overseas workers would have an investment they know how to run. This is ideal of they have returned and can supervise it themselves. Entrusting the investment to somebody else increases the risk. Investing in the stock market is not advisable except in the highly stable stocks that they call "for widows and orphans." And there are only three or four of these in the local stock market. Ideally some mutual fund stocks were available backed up by some stable organization. But there are none of these in sight at the present. The advantage of such mutual funds, if well run, is that it will take advantage of the bull run that the present economy should have for the next five or so years. Direct investing is also possible but this is the riskiest. I know of an executive who came back from abroad with his retirement money but promptly lost most of it in three years. Looking back at his investments he came to the conclusion that his investment instincts were no longer Filipino. He was out of sync with dealing with people here. Of course, he might just have been unlucky and the general economy was on a down turn at the time of his investments. This also points to Filipinos and Filipino groups who are now coming back with investment capital. They also have to be helped to make the most of their opportunities. <emeterio_barcelon@yahoo.com>

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