Bank Products Demystified - Retail Treasury Bonds

1.       Retail Treasury Bonds

There was a time when bonds were too pricey for ordinary Filipino investors. That all changed when both the government and the corporate world offered retail bonds. It is now becoming popular as an investment option given that it offers higher interest rates than regular time deposits. For RTBs (retail treasury bonds) offered by the national government, investors can invest with a minimum placement of P5,000 and in multiples of P5,000 thereafter. On the other hand, retail corporate bonds vary in amount, depending on the issuer.

 

Here are some reasons why ordinary Filipino investors should consider RTBs:

 

1.       Higher rates compared to savings, checking, and even time deposit accounts.

2.       Risk free for government issued bonds as it is guaranteed by the Philippine Government. 

3.       Interests earned are automatically credited every quarter to your nominated account. 

4.       Principal is credited at maturity. 

5.       Highly liquid as there will be ready buyer should you decide to liquidate your RTB before maturity. 

6.       Accepted as collateral for back to back loans by some bank.. 

7.       Various terms to choose from; 3, 5 and 7 years. 

Computation of interest is a simple PRT (Principal x Rate x Term), subject, of course, to 20% withholding tax.

Leading banks like BPI, BDO, Metrobank, and Eastwest offer this type of investment. So go to your nearest bank now and ask for their RTBs.