How OFWs can start investing

Overseas Filipino workers (OFWs) may be earning good money, but not many are saving and investing their hard-earned funds wisely.
In a recent episode of On The Money, BPI Asset Management and Trust Group vice president for emerging markets Ricky Espiritu said OFWs typically end up spending their money, instead of investing.
"From the studies that we have done, out of about a million OFW clients within the bank, less than 10 percent are into investing," he said.
He noted that many OFW families, who are the beneficiaries of remittances, usually spend the money on gadgets, clothes and cars.
Espiritu said it is important to provide financial education to OFWs.
"It's letting them know that there are investment outlets available to benefit their future. Teaching them about life goals, saving for a house, education and setting aside for your retirement. All of that I think should be in the minds of OFWs, for them to shift from being spenders to savers to investors," Espiritu said.

Before investing, he said OFWs should check the amount that they can invest, and see what their goal is and stick to it.
Espiritu said the easiest way to get into investing is through funds. Funds are invested by the bank itself, so for OFWs, they would just have to invest in a particular fund that fits their risk profile.
"Before they get into investing, they have to complete a client suitability assessment questionaire, which reveals their profile... From there, if they're an aggressive investor, all the funds, including equities will show up... But it depends on their risk profile. We have funds for every risk profile," he said.

Many OFWs, Espiritu noticed, are "moderately conservative."
"They would like returns above time deposit but not as aggressive or as high as those who invest in stocks. They primarily invest on fixed-income, money market instruments such as Treasury bills and deposit accounts," he said.
Asked why OFWs prefer these types of investments, Espiritu said it may be due to lack of knowledge.
"They're used to keeping money in the bank... And when OFWs have money to invest, the first thing they think about is buying a house... Investment funds and other products are not foremost in their minds," he said.
Espiritu said investing in land and real estate may even be riskier than putting your money in stocks or bonds.
"Investing means that your money works hard for you. It gives you returns that are higher than your savings account.... We believe that investing in land, real estate and housing would be riskier than investment funds that are invested in stocks or bonds," he said.
For instance, if you need money right away, you cannot just find a buyer for a piece of land or a house, unlike equities.
"Equities are easy to sell when you need the money. If you're low on money, you can't sell real estate quickly and get good value for it," Espiritu said.

OFWs can also opt for the Personal Equity and Retirement Account (PERA), which is expected to be launched this year.
"An advantage of investing in PERA for OFWs is they get bigger tax exemption or benefit, since OFWs are allowed to invest up to P200,000 per calendar year, as opposed to a non-OFW that can invest only up to P100,000 per calendar year. They can get as much as 5 percent tax benefit. If it's P200,000, that's P10,000 worth of tax exemption," he said.
For first-time investors, Espiritu recommended going into funds.
"Funds are managed by experts from the bank. They put the money in markets or assets that are perceived that are not as volatile, depending on what you choose, and trade it based on when they think is the right time to buy and sell. In that way, we are able to manage your funds better than you would," he said.
Espiritu also suggested first-time investors learn about investing by attending seminars offered by banks.

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