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The Best Investments for OFWs
BY Bea Bongat
Overseas Filipino Workers (OFWs) are considered the modern day heroes. They work in a foreign land in the hopes of providing a better future for their families thousands of miles away. Payday Friday for them doesn’t mean eating in a lavish restaurant. It means heading over to the nearest remittance center to send money back to their families.
It’s no surprise that remittances last year reached Php 122.44 billion (USD 26.93 billion). Earning in foreign currencies allows greater purchasing power for Filipinos, and supposedly, a larger opportunity to save and invest. However, based on the BangkoSentralngPilipinas’ 2nd Quarter (2015) Consumer Expectation Survey, only 49.7% of the households surveyed put remittances into savings and only 6.7% put it into investments.
OFWs need to realize that they cannot work abroad forever. Sooner or later, they will need to retire and won’t be earning as much as they used to. In this regard, they need to make their money grow, and earning in foreign currencies is fuel to the fire. They can invest more money and in more options. Moneymax.ph, in its continuing efforts to educate the public about personal finance, lists four investments for OFWs:
Most OFWs prefer to invest in real estate rather than other vehicles. One reason is because owning a home is tangible and concrete compared to stocks and mutual funds. Another is the personal benefits of owning your own place. Earning in foreign currencies allows OFWs to invest in real estate in the first year or two of them working abroad. Compared to those working in the country, it may take years to be able to save up for a down payment on a home.
Why is it a good investment?
Real estate is a good investment because your property has the potential to provide you great returns. Also, if you end up selling your property, you will have a large cash reserve in the millions. A word of caution though is not all properties will be sold at a gain. Stay tuned in the coming weeks and Moneymax.ph will give you the ins and outs of real estate investing.
Mutual Funds and UITFs
Mutual funds and unit investment trust funds (UITFs) are pooled investments which OFWs can participate in with as little as Php 5,000. To open a UITF account, most banks require a personal appearance, but others, such as BPI, PNB, and Security Bank, allow you to apply abroad if you already have a Savings Account with them (or in the case of Security Bank, an already-existing UITF account). For mutual funds, you can open an account through Philequity.
Why is it a good investment?
Mutual funds and UITFs are good investments because they do not require much effort and time compared to others (e.g. stock market, own business). A professional fund manager handles your mutual funds and UITFs. All you need to do is put in the money. If you want to know more about mutual funds and UITFs, you can read this article.
With the advent of online trading platforms, OFWs can now participate in the Philippine Stock Exchange (PSE) outside their home country. COL Financial, an online broker, allows OFWs to open a trading account without a personal appearance. You can send your application forms and supplementary documents via courier and you can fund your account via wire transfers. In addition, numerous online brokers allow you to open an account with as less as Php 5,000, and with the earning capacity of OFWs, they can invest more than Php 5,000 and add to it monthly.
Why is it a good investment?
Stocks are a good investment because they allow your money to grow if done right. Annual returns of 50% are possible with the stock market, but of course, you need to put in the effort of learning and studying. The good thing is that financial literacy seminars have expanded out of the Philippines and into countries where there is an abundance of OFWs. Look for the schedule of Marvin Germo’s Stock Smarts and TGFI’s Global Summit seminars. If you’re decided on stock investing, this article will help you in coming up with your strategy for investing in the stock market.
Another investment is being an owner of a franchise. Tim de Asis, flight crew and franchise owner of Burger Factory, says in an interview with MoneyMax.ph that “being a franchise owner provides you the opportunity of learning the ropes of business while having a proven system in place.”
For small franchises, such as food stalls and carts, starting capital ranges from Php 35,000 to Php 170,000. For bigger franchises, capital is much higher and starts at around Php 800,000. A word of caution: always have a buffer or emergency fund. You may spend more than your starting capital for miscellaneous expenses such as permits, rent advances, additional equipment, etc.
Why is it a good investment?
Being a franchise owner offers OFWs the opportunity for additional income. But you must have partners you trust. Being an OFW, you are not always in your home country, and someone will have to run the day-to-day operations .Tim stresses that “it’s important to find people you trust. Since I am not always in the Philippines, I have trusted partners to handle the daily operations.”
While you are away, you can let your relatives handle the franchise business. Instead of depending on your remittances, your relatives can handle the franchise to learn the ropes to increase their earning power and professional development.
The Future of the Philippines
Year after year, the number of OFWs continues to increase, totaling 2.32 million in 2014. These modern day heroes continue to work away from home for a brighter future. They want to be able to provide their families the basic necessities, send their children to good schools, and of course, retire comfortably. Investing makes this possible. Whether it’s buying your own home or participating in the stock market, investments are an opportunity for financial independence OFWs shouldn’t miss out on.
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Greek stock market suffers record drop as shutdown endsby John HADOULIS
Athens, Greece | AFP – Greece’s stock exchange suffered its steepest-ever fall on Monday, plunging more than 16 percent as trading resumed after a five-week shutdown triggered by the country’s debt crisis.
Bank shares were particularly hard-hit, sinking some 30 percent after the Athens bourse opened for the first time since the government imposed capital controls to prevent a bank run and stave off financial collapse at the height of its standoff with EU-IMF creditors over a new bailout.
The ATHEX index ended the day a record 16.32 lower to 668.06 points, its worst drop in nearly 30 years, highlighting investors’ ongoing anxiety about the Greek economy even after a new rescue deal was agreed last month.
The previous worst loss in the stock market’s history was a 15.03-percent tumble in 1987.
“The situation in Greek equity markets will have to get a lot worse before it gets better,” said Luca Paolini, Pictet Asset Management’s chief strategist in London.
The reopening of the stock market came after senior EU and IMF auditors held their first meetings with Greek ministers to finalise the new three-year bailout for the country that could be worth up to 86 billion euros ($94 billion).
The negotiations are “going in the right direction,” EU Economic Affairs Commissioner Pierre Moscovici told the Greek daily Ethnos.
“Our Greek partners are responding in a constructive and comprehensive manner, and are working hard,” he said, after months of acrimony between the two sides.
The tough conditions demanded by creditors in return for the rescue funds have however put a major strain on Prime Minister Alexis Tsipras, whose Syriza party came to power on an anti-austerity platform.
The 41-year-old premier faced a mutiny among his lawmakers last month and he has warned that early elections will be called if his MPs refuse to ratify the bailout in parliament.
Analysts had widely expected Greece’s vulnerable banks to bear the brunt of the mass sell-off when traders returned to their desks on Monday.
Uncertainty over the fate of Greece’s economy, and its place in the eurozone, has seen bank customers withdraw some 40 billion euros ($44 billion) since December, leaving lenders dangerously low on cash and in need of urgent recapitalisation.
Banks across Greece were ordered to stay shut when the government imposed its capital controls on June 26. They reopened on July 20, but withdrawals and money transfers abroad remain restricted.
The National Bank and Piraeus both fell to the maximum allowed level of minus 30 percent in Monday’s session. Alpha Bank finished at minus 29.81 percent while Eurobank fell 29.86 percent.
The four top banks are expected to undergo stress tests in the autumn to determine their recapitalisation requirements using European rescue funds.
Greek officials hope to complete the operation before new regulations come into effect in 2016, when bank shareholders and depositors will foot the lion’s share of recapitalisation costs — a process known as “bail-in” — instead of European taxpayers.
Investors on Monday also offloaded shares in top companies such as gaming giant OPAP, electricity provider PPC, telecoms operator OTE and leading refiners HELPE, all shedding between 12 and 23 percent.
“Pressure by sellers was high. It is logical and anticipated by everyone,” stock market chairman Socrates Lazaridis told Bloomberg TV, adding that he expected the market to stabilise in a month’s time.
The reopened stock market currently operates as normal for foreign investors but local traders still face restrictions and cannot buy securities with money from their bank accounts in Greece. They can, however, use foreign bank accounts or make cash transactions.
The Greek economy is forecast to contract by at least 3.0 percent this year.
In the latest batch of worrying data out of the country, a survey by a small traders association on Monday found that 51.2 percent of small and medium-sized companies had seen their sales drop by more than half since the capital controls were imposed.
The measures have forced many companies to send staff on mandatory vacation and disrupted the import of a wide array of goods, raising the prospect of shortages in the autumn, according to market insiders.