Pinoy and the Money Matters

Best Tax Tips for Freelancers in the Philippines

How should Freelancers handle their taxes? Some freelancers don't seem to find any importance about filing their taxes. Most of them forget the need to record incomes, expenses and tax deadlines. This is because most freelancers don't find this as an important responsibility. According to Salve Duplito a Resident Financial Advisor "Unpaid taxes and unfiled documents are like vipers hiding on your closets. They are easy to ignore, until its too late, and they decide to strike."

As a freelancer , it is important to record every earning specially if you or your small business earn big. The sooner a freelancer set their tax filing system straight, the more worry free their life is going to be.

A freelancer is required to:

1. prepare monthly returns

2. Meet monthly and quarterly schedules of tax payments

3. Submit reports and audit financial statements

4. Keep books of accounts

5. Issue Receipts

An earner that makes more than P 1.9 million is vat-able in an amount of 12% VAT. While and earner that earn less the P1.9 million a year should pay 3% percentage tax. For those people whose business provides services, percentage tax is more practical. Keep in mind that this is considered separate from personal income tax payments.

When Income tax is filed, there are two choices to compute allowed deductions:

1. Optional Standard Deduction of 40% of income.

2 Itemized deduction, which has no limit

Experts still prefer to use the OSD-Optional Standard Deduction since it is hassle free, simplifies record keeping and removes the necessity to defend a specific deduction/expense to the BIR. Other experts also says that it is fairly impossible to exceed paying more that 40% limit.

In the other hand, other experts recommend Itemized Deduction to reduce the amount of tax that needs to be paid tremendously. In this computation, a tax payer may deduct anything at a very reasonable and realistic cost as long as theirs a receipt or proof of payment clearly indicates the necessity of the expense to the business. Careful and proper classification of deductions are very important in this computation since it could lead to disallowed deduction if its not properly organized. BIR follows only 1% of gross as a threshold for the allowable deduction amount.

In a business, being able to issue receipts and claim that your a business person that pays taxes is considered a measure of competence and professionalism. For someone who is not fully aware of tax declaration may also hire a competent accountant that can be trusted or someone who can teach the right way to do your taxes.

Banks used to love those people working in BPO companies since BPO employees earn alot and spend alot but that seems to be changing. A viewer from ANC: On the money episode have shared his experience from an anonymous financial institution, this is how the letter go.

Dear Salve:

I was walking in the mall 7 months ago with a friend when someone approached us offering freebies for a credit card. I found myself applying for one and answering their questions but when they asked for my ID and learned that I worked in BPO, they said "mukhang malabo sir kasi sa BPO kayo nagtatrabaho." I asked what was wrong with BPOs and they said that agents don't normally pay. Although I told them that i work in the HR Department, they said they would check and call me, but they never did, Isn't this credit discrimination?

Lawrence

Note: Lawrence worked at Telus Inc. and already had a credit card at that time and worked as an IT recruiter in HR Dept. for Canadian Canadian Account

Around the year 2000 when BPO companies were starting to boom. BPO call center agents were young, earning serious money and very big spenders. The spending patterns was mostly patterned of their high stressed job. But these people are also most often the people who quickly change employers since BPO companies offer attractive sign-on bonuses to high performing agents which makes it easy for them to get a new post.

Sources in the banking industry said, this system is turning off financial institutions since going after someone who immediately transfer to different companies is very difficult to catch. This issue has been so serious that Banks decided not to offer credit cards to any BPO Workers.

Other than this, there's also a talk going around that banks are automatically rejecting applications from lawyers and politicians.

It is understandable that the bank has to protect the quality of their portfolio which includes staying away from individuals who are not capable to pay however Salve Duplito said,

"There should be a mechanism to protect consumers from credit discrimination so that access to credit is not based on some underwriter's subjective decisions, or in this case, the general failure of an industry to make good on their obligations."

Salve Duplito/Residential Financial Advisor

According to Pia Roman- Tayag, BSP Head for Financial Inclusion Advocacy, one part of their solution regarding this issue is to improve access to financial information about the financial institutions' clients.

Two things that can help this effort:

1. Success of the Credit Information Corp. in setting up a credit database

2. New Technology that use data analytics so that banks can use big data to "score the unscoreable"

Pia added that our country needs this as only 10.5% of adults have access to formal credit. Pia is talking about the World Bank's Financial Inclusion Data where surprisingly only 3% of our population ages 15 and up have access to credit card. In addition, only 27% of adults have an account at a formal financial institution which means our banks financial tools are not useful as it is supposed to be. According to Salve, financial empowerment begins with being able to use the tools that the financial institution can offer. Clearly, this is not going to improve, especially if consumers are subject to credit discrimination.

In United States, there is a law that protects individuals from credit discrimination like the Equal Credit Opportunity Act and the Fair Housing Act, both of this law protect the american consumers from being refused credit if they qualify for it as it is illegal to base credit decision on

race or color
religion
national origin
Gender or marital status
receipt of public assistance

This US Laws apply not only for credit cards but to any other forms of credit such as Loans, line of credit or Mortgage. This US Laws are not in existence here in the Philippines, which means we need to support the creation of an integrated credit database. Other than this, as an individual we should protect our credit history by paying off our obligations and lastly by building our own personal credit resume. We hope that one day, our government could come up with the solutions to protect us consumers against financial institutions that practice credit discrimination.

Acknowledgement:

Content credit: Salve Duplito/ ANC

Image credit: Arkansasrealtors.com

Not everyone has been fully aware of the Provident fund that was launched by SSS. Provident fund will allow members to enjoy higher returns on their contributions. The tax refund is opened for employed and self- employed Filipinos here and overseas.Provident fund gives additional layer of protection to contributors.

Provident Fund Contributors Requirement:

Available to members under 55 years of age
Member must be paying maximum SSS Contributions of P1,560/month
Maximum contribution for the fund is P100,000/year

According to Ms. Marissu Bugante, VP for Public Affairs of SSS, this provident fund will assure contributors of higher benefits in the future as this individual accounts will generate dividends depending on the amount of the contribution.

Provident Fund Benefits:

Retirement fund and total disability fund (65%)
Medical (25%)
General Purpose Payments (10%)

Funds withdrawn for purpose of medical and general purpose payments before the 5-year retention period will be subject to penalties and charges. This provident fund will be a good choice for contributors who are earning more as this will give them a good savings options at their own benefit.

The main advantage of provident fund is the retiring contributor will have an option to withdraw the the fund in a lump sum or monthly pension. Other than this, SSS guarantees earnings based on 5-years treasury bond rate while the remaining 35% will be guaranteed to earn at 364-day treasury bill rate.

At the moment, SSS have 35,000 OFW members who registered in the program and are earning incentive bonuses for the last two years, The maximum amount that was earned by one of the flexi-fund member last year was over P130,000 not adding up the additional P60,000 earnings that was received this year.

The fund launched today will be available around February of next year, This will be used for investment in government and private sectors and loans for members.

The Provident Fund makes investing easier for filipinos while providing them with benefits. For those who relies in retirement,provident fund should be considered specially for those who do not have additional savings and investments.

Acknowledgement:

Content Credit: SSS and ANC/ Melissa Gecolea

Image Credit: www.philstar.com

Some banks and even retail stores in US have been attacked by hackers.Now, lets see what bank hacking means and how we can avoid it from happening.

Bank Hacking is more profitable than kidnapping or robbery
Appears victim-less because of the lack of violence (but serious financially)
Involves fewer people and resources
Generates more money and targets more people

According to Drexx Lagui,Digital Forensic Expert, the easiest thing to do is to go after the bank account holders themselves or the individual persons like the branch managers because they have the authority and their names are published in the internet.

In a recent case, hackers targeted a branch manager. Locally the security breach was caught as were the perpetrators. The hackers broke in the computer and transferred money to a Las Pinas branch, due to the security features of the bank they were able to find out that the money was fraudulently transferred as there were indications of hacking attacks.

Tips to Spot Hacking:

Watch out for suspicious e-mails.
Be careful of the sites being visited
Hackers profile based on the sites visited
Hackers send e-mails appealing to the targeted victims interests and weaknesses

Tips Against Hacking:

Call your own bank to double check email from them
Call the police to confirm if they have emailed you
Do not immediately click on any link nor reply unless you have verified

Banks are not obligated to give your money back if your account was hacked through your actions. Most bank will replace the money as an act of goodwill but still depends on the bank's discretion if they will replace the money that was stolen.

According to Drexx hackers have impressive credentials as well. Russia and China have the most successful hackers. Other than this, we also have to watch, as per Drexx there are rumors that even our politicians are involved in hacking for the incoming 2016 election.

Bank continue to upgrade their security system but account holders still have to remain vigilant against these hackers as we do not know when they might attack.

Acknowledgement:

Content Credit: ANC/Salve Duplito

Image Credit: www.ehackingnews.com

Will the 50-20-30 budget approach will work for Filipinos?

Budgeting could be easier with the expert called 50-20-30 approach. 50% goes to fixed costs, 20% to savings and investment goals and 30% to fund budget. But is this approach good or bad?

This is a great approach for those who don't know how to begin budgeting or are too clueless on how to control their spending and save a bit of money. Lets all admit that this is almost 90% of the people around us, budgeting is a very common conundrum. If you are in the situation, you have probably tried tracking your budget to the envelops system or an excel worksheet, use quicken or an app. Its not about all of these things but either forget to begin or fail to sustain them. Simplify the process by using the 50-20-30 approach. Limit your spending for three categories:

50% of total-take home pay should be put in for essential cost, this should include mortgage, school service for children or parking garage fees at work.
20% should be put in financial goals such as college education fund, retirement or health fund.
30% is for the lifestyle expenses such as clothes and other lifestyle activities

By creating only a three categories, this approach break the mental barrier for most people averse to tracking their finances. That is the biggest benefit for this budget approach. But, remember that the success in this strategy does not depend on tracking after spending the amount. Its success hinges on creating a limit and then sticking within that limit.

This budgeting requires a bit of thinking and having a clear idea what your essential spending categories are and a list of financial goals that you want to achieve.

Weakness:

The weakness of this budgeting approach lies on a simplified simplicity. Even if a person is earning more than the average amount every month. How easy is it to keep essential spending below 50%?

For most people half of that will probably go to mortgage, food and considering which category should include monthly savings for annual expenses like tuition, travel or car maintenance.

Lastly, is 20% too much or too little for financial goal? Some might find that a 10% amount is better for beginners, some may find to reach their financial goals they may have to push to 30% or even higher.

The 50-20-30 approach is a good soundbyte but if followed strictly then it might lead you astray.

If somebody earns P30,000 a month, Using this approach, only P15,000 (50%) should be allotted of rent, transportation, food and electricity. Set aside P6,000 (20%) for financial goals and then P9,000 (30 %) for lifestyle expenses. In both low income groups and high income brackets, this budget approach is not going to work.

"To make budgeting work, you have to create your own and adapt it to your own situation."

Salve Duplito.

In saving money, it would not matter to start saving at least P50 per day and increase it to P100 per day in 6 months or 1 year. The amount at this point is not as important as to creating a habit since it is difficult to save money. To connect this to budgeting, skimming from the top would be very helpful by setting aside saving immediately after receiving the salary and make do with what remains without having to borrow. But, lets keep in mind not to get stuck into that level,that is by increasing it little by little by taking 10% of total take home pay or even higher. To make this savings habit easy to do, focus on setting aside savings and investment funds first then make do with the rest without having to borrow. In some months, essential expenses may go higher than 50% of total monthly earnings and some months it is lower than 50%. But it will not matter if you treat savings and investments like a monthly electricity bill, whats important is the savings and investment goals.

Other people say that 20% savings and investment monthly is doable. This is by keeping our spending simple and by motivating ourselves and not think about retirement rather for future spending like travel, cruises and and happiness at 60 years of age and that could give some motivation.

When a person hit 30s, around 40% of income should be set aside already for investment. By 40s, affords a 40% and go up higher than 40% but then again this is a very general rule.

Like any financial rule of tongue, this 50-20-30 strategy can lead you astray, it may be a good starting point but remember to use it only if it fits your own financial goal.

Acknowledgment:
Content Credit: ANC/Salve Duplito
Image Credit: savingissexy.info

"Infrastructure limitation should mean one of the big disturbance in providing faster internet service to more Filipinos" a message from the two major telecommunications companies invited to a senate hearing on the issue in September 16, tuesday. PLDT Director Rey Espinosa said some P746 billion of capital outlay would be need to provide a minimum of 2 mbps internet speed for households all over the country.

"We have to take it into account how much that will cost in terms of investment,

while we might want to strive a minimum of 2 mbps for 80% of the household. The amount of the capital expenditure is just too high for the country and we are saying if we were to provide a minimum of 2 mbps to all regardless of social class, there is also a question of affordability." Rey Espinosa - PLDT Director

Telcos also insisted that there is no way to guarantee to get a minimum of 2 mpbs for internet speed for mobile devices since this would depend on the demand in particular area.

"For example you are going along Edsa and there is an accident and you clogged-up,

then the natural tendency to have the usage pattern to increase thereby creating a temporary hotspot."

- Manny Estrada/Globe Telecommunications Co.

Both Globe and PLDT say they see 100% 3G coverage throughout the country by the end of 2014. According to National Telecommunications Commission, 3G connection is currently at 60%. Senator Bam Aquino, Chairman of the Senate Committee for Trade Commerce and Entrepreneurship, believes that government should already step-in and spend to improve telecommunications infrastructure. He also -- on the big gap between the minimum and the maximum connection speed advertised by internet service providers or ISPs. Senator Aquino says, this is advantageous to consumers since their service expectations may not be me.

The NTC also explains it is currently unable to regulate internet service rate because internet is defined as a value added service by law. The commission though can regulate the quality of the service given the proper equipment. The NTC is eyeing the purchase of a P14 million machine to monitor internet speed in metro manila.

Ultimately, Sen. Aquino believes that improving internet service is a matter of national importance since it has a direct effect on the growth of the economy and the creation of jobs.

"I will have to admit, this could not happen if we experience good internet service,this is the time when

the government should step-in authority." - Sen. Bam Aquino

Aside from improvement in infrastructure, other proposals discussed in the committee hearing including encouraging more competition in the ISP Industry and exploring systems that will make internet traffic more efficient in the country.

Acknowledgement:
Content Credit: ANC/Atom Araullo
Image Credit: Mabzicle.com

BIR Commissioner Kim Henares pushing to implement to ruling requiring companies to list all the list of investment receiving dividends or coupon payments.This ruling may be affecting corporate bond sales which explode since the ruling in January. Companies have sold $4.7 billion bonds here in the Philippines and trailing the $17.8 billion in Malaysia and $12.5 billion in Thailand this year.

Revenue Regulation 01-14 requires all withholding agents to submit an "alphalist" of payees on income payments to creditable and final withholding taxes and prohibit the lumping into a single amount and account of various income payments and taxes withheld.

The Philippine Stocks Exchange together with the Bankers Association of the Philippines and several other business groups are petitioning the Supreme Court to declare the ruling unconstitutional. They were successful in getting a temporary restraining order.The Supreme Court ordered the BIR, SCC and Department of Finance to comment on the petition.

Petitioners argue that the regulations jeopardize the privacy of individual investors and market stability, they add complying with the regulation would violate data privacy act. The current script was or are electronic system is settled by the Philippine Central Depository or PCD. The system ensures the efficient transfer of shares and protects investors from unauthorized third parties since it disallows access to information beyond the PCD nominee.

Petitioners said complying with the regulation meant violating the data privacy act while non-compliance mean sanction by the SCC. Both have criminal penalties on them. In a letter to the BIR and Department of Finance earlier this year the petitioners claim that RR01-14 increases cost of doing business specially for non-resident portfolio investors will have to hire accredited tax lawyers to process their tin applications.

In an interview with Bloomberg Kim Henares, the BIR Commissioner said "Why complain if they had reported it when they should have. They should be paying taxes on it." She said that it makes her think that the right taxes haven't been paid by investors and issuers. For now, the case is still in court. As the business community waits to see what's next.

Acknowledgement:
Content Credit: ANC/Melissa Gecolea
Image Credit: tomtax.blogspot.com

What is the cost of corruption in the Philippines?

In the last year alone the Philippines has been rocked by one corruption scandal after another. From the pork barrel to the BAP to the allegedly overpriced Makati City Hall building. So what effect does all this corruption have on our economy and what is this costing the Filipino people whose taxes are footing these bills.

Businesses also suffer since they have the factor in corruption to running costs to corruption and this takes money from employees and revenue. Worst case scenario according to Neri is that a company losses so much money that they are forced to shut down. Neri said, "Some of them are not able to anticipate the amount of expenses that they have to incur just to example: comply with the local government, rules where there in the first place and then pull in place by the local government and now become part of their expense."

The World Bank has declared corruption as the biggest obstacle to economic and social development by undermining the rule of law and the institutional foundations on which sustainable development depends.

According to Transparency International corruption adversely affects long-term economic growth through its impact on investment, taxation, public expenditures and human growth. The World Bank estimates that $1 trillion paid in bribes worldwide in both developed and developing countries and still does not include embezzlement of public funds or theft of public assets.

Neri says corruption has been on our system for a long time but they are only recent being highlighted. The danger is there are still many instances that don't make it to the public attention - specially agri-business there are business located in provinces and rural areas and the risk of corruptions are not being seen by the authorities and medias is actually high. Neri also added that corruption can cost the country potential investment since many foreign companies factor the cost of corruption into their expenses. A well economic forum has also gauge its based on surveys conducted by these institutions, so the numbers don't improve significantly then some businessman decide not to pursue their business plan at all. Corruption doesn't just take money from tax payers and put it into the pockets of the unscrupulous, it stands on economic growth lowering productivity and eventually losing any potential future gain from a country.

Acknowledgement:
Content Credit: ANC/Melissa Gecolea
Image Credit: Philstar.com

One of the trickiest issues in tackling personal finance in the media here in the Philippines is tax payment. A group called CSR Philippines promotes a way for ordinary citizens to declare true profit and pay the right taxes in a way that saves money at the same time.

Raymond Abrea used to be AVP for BIR Examiner. He applied for the job, with the sole purpose of understanding the tax system, tax law and the administration of taxes. He was with the BIR for two years. Abrea now heads the Center for Strategic Reforms of the Philippines and is at the forefront of tax reforms with the mentorship of former Finance Secretary Jesus P. Estanislao, partnership of Senato Bam Aquino among others.

Abrea said that tax planning will help people pay the right taxes without paying more. Their company can give good options to help companies avoid getting into the under the table deals. The Citizen's Tax Planning reminds each tax payer of the duty to pay the right taxes since paying the right taxes does not mean paying more taxes. The application of science and the system behind it, from the tax profiling up to the assessment that an examiner does during audits, all of these are services offered by the CSR Philippines. And as part of their social responsibility, CSR is also honest in case they see that a company is not complying or not at par with the threshold of the Bureau of Internal Revenue to avoid any conflicts and problems in the future. Abrea also highlighted that using fixers would not solve the problem but instead it only increases the company expenses.

CSR is advocating to do the right thing that can give peace of mind at the same time cheaper costs. Not paying taxes is subject to 25%, 20% interest and compromise penalty of up to P50,000 surcharges. Most of the time when you get assessment the penalty reaches 300% of the total amount which means it is really costly unlike if it is done the right way.

Doing the right thing however requires in-depth knowledge about how much you should be paying monthly, quarterly and yearly. For most businessmen or professional, this requires time to study complicated tax advisories and keeping track of tax deadlines. That will not be an issue in an entity have the money to hire a consultant, but that costs too much for small businessmen and professionals.

Ideally, Tax advisers should be coming from the BIR, unfortunately these services are not available as they are more focus on collecting taxes. Its common knowledge that even small strides in improvement of our tax system will have big impact on our people. As the country is now facing so many issues that the government would not have enough time and resources to support the reform in our tax payment process. The best thing that we can do as citizens is to have the willingness to do the right thing.

Abrea's Recommendation to Tax Payers :

Know your deadlines
Know your requirements - When you file tax return, do not forget the supporting documents specially the financial statements or book of accounts.

Abrea's Recommendation to BIR:

Remove face-to-face audits
Computerize the tax system
Pay examiners well

Abrea added, the Philippines needs legislative reforms on simplifying the tax system and lowering the tax rate so it can be affordable to small businessmen.The BIR also needs to simplify the process off tax payment further, fully computerized to create an integrated system for registration up to audit so that examiners do not have to talk directly to tax payers to audit them. The audit in the BIR is not helping but even support the corrupt system because with the small salary of our examiners which is roughly P15,000 compared with the amount of taxes they collect from tax payers who would be willing to pay to clear up everything which always give the tendency of negotiation.

The right attitude it to embrace and accept our civic duties to pay the right taxes and to vote honest leaders so we would not have complaints that our tax payments are being corrupted and at the same time to know our obligations so that we don't end up paying all those penalties. "At the end of the day, we will have peace of mind if we do the right thing. There is no replacement to that; a disposition that you are honest, that you have done your part. If other people won't, it doesn't change anything. You did the right thing." Raymond Abrea - Founding President of Center for Strategic Reforms of the Philippines.

"In the end, what will save all of us is the culture of honesty and system that supports that culture." -

Salve Duplito.

Acknowledgement:
Content Credit: ANC- Salve Duplito
Image Credit: Philstar.com

The Bangko Sentral ng Pilipinas and Bureau of Customs have recorded past attempts of smuggling one peso coins for export and melting. Philippine coins are found to have more intrinsic value than face value specially the smaller one. When these coins are converted to raw materials, they are used to manufacture certain parts of mobile phones and computers.

The BSP said that there are currently about 20.8 billion coins in circulation which means there are roughly 207 coins per person and yet, how often have we even short changed at the store or with a cashier either asking for exact change or saying they have no small change. This is what the BSP calls an artificial coin shortage. They say people tend to keep their change in their wallets, piggy banks and other various containers rather than spending them. BSP said that there is no real coin shortage and they like people to spend their coins to buy things rather than use their bank notes.

Congressman Sonny Collantes filed a bill penalizing coin hoarding which is defined as possessing coins of legal tender beyond the requirements of regular business as may be determined by the BSP. House Bill 4411 which was authored by Representative Sonny Collantes would make coin hoarding punishable with 8 years imprisonment and a fine of not more than P300,000, The only exemptions are the charities, private banks, financial institutions and government agencies. A related bill filed by Representative Sherwin Gatchalian seeks to find retail stores that don't give exact change to their customers. So now, its about time we don't turn our nose up to small change since its a bigger deal than we realize.

Acknowledgement:
Content Credit: ANC/Melissa Gecolea
Image Credit: Bryologue.com

How true is this when people today are resorting to treatments and even surgery to further their careers? Studies have shown that good looking people get paid more so it seems that beauty gives you deeper pockets.

Based on the report of the New Republic have revealed that Silicon Valley have become the most ageist place in United States with men in their 20's visiting plastic surgeons to maintain their youthful looks. Skin tightening, botox and hair transplants was the most major concern, this was according to the bay area surgeon on the report.

Here in the Philippines, Beauty Expert Vicky Belo said, there had been a rise in number of men coming to their clinic over the last 25 years. She pointed out that some of men are doing it for their career path, in fact the transplants have gone up. Men are very conscious about the thinning hair and being bald specially when their giving out presentations at work and most of men starts losing their hair as early as 27 so they start having hair transplant before it gets so bad. Some men also visit them to improve their chin and the jaw because filipinos' don't have really nice square jaw.

According to a study by an Economic Professor Daniel Hamermesh titled "Beauty and the Labor Market" attractive people get a premium of at least 5% more income than the less attractive peers who suffer of salary penalty of up to 9% less compared to attractive peers.Enhancing looks with make-ups can bump up your pay in the U.S. According to a study on America Economic Review said that women who wear make-up at work can earn 30% more than those who ear none.

There is one caveat that exceptionally attractive women face discrimination when applying for a more masculine job but on the whole it pays to look good. Here in the Philippines, people are becoming more conscious of their looks at the younger age. Dr. Vicky Belo said that the profile of their clientele have become much younger. Locally there is a growing number of people not in the showbiz or modelling industry who had treatments or surgery to keep them competitive in the work place. Today plastic surgery and other procedures have been made affordable by clinics that allow people to pay in interest free and installment. It is no longer the preview of the rich and famous. Dra. Vicky Belo said "only 10% of their clients are stars, 30% are very wealthy but the rest of the 60% are normal people who just go to work but they value the way they look."

Initially, we are judged on our looks, so it might be worth the investment to make our self look better, but ultimately we are judged on our competence so make sure we don't just invest in our looks but in ours skills as well.

Acknowledgement:
Content Credit: ANC
Image Credit: Philstar.com

An ANC episode hosted by Salve Duplito, a Residential Financial Adviser from ANC was asked to give her opinion on a viewer who is asking about mutual funds. The viewer is receiving P100,000 next year and plans to invest in UITF or Mutual Funds, he added that someone already talked to him and said that if he invest P15,000.00, after 3 years it will grow to P45,000.

The viewer was given big warning signal since Mutual funds or Unified Investment Trust Fund do not give guaranteed returns. There is no way anybody can truthfully tell that the P15,000 investment will become P45,000 in three years. Even if figures were shown of historical returns that more money has grown in mutual funds in the past years.

That is not a proof that someone will get the same returns in the next years. Something funny happens when prospective investors are shown impressive charts regarding historical data on returns.. since a very good investment solicitor will always say that "past returns do not guarantee future returns." However, in the prospective investor's mind is that, he is missing something if hes not getting as good return when he invest his money in a time deposit compared to putting it to Mutual fund or UITFs. Mutual funds and UITFs cannot guarantee returns and the reason is that its underlying assets or simply put the investments, the money was used to buy are traded in the financial market and thus, fluctuate in value based on sentiments, economic data, company performance,among others.

This is the truth about Mutual funds and UITFs:

Nobody in the world can predict sentiments
Nobody can predict weather
Nobody can predict geopolitical concerns

Now, where can it be best to invest your money?

1. A legitimate Company

2. A company with proven track record in terms of efficiency, customer service and management style

3. A company that does not charge more than 1% of your total investments

Acknowledgement:
Content Credit: ANC/Salve Duplito

Pinoy and the Money Matters

Best Tax Tips for Freelancers in the Philippines

Credit discrimination to BPO employees in the Philippines

SSS Launched Provident Fund

Bank hacking incident in the Philippines

Will the 50-20-30 budget approach will work for Filipinos?

Telcos blame inadequate infrastructure for slow internet in the Philippines

BIR strikes market investors

What is the cost of corruption in the Philippines?

How can Filipinos save more by paying the right taxes?

Are Filipinos running out of coins?

Can looks help increase Filipinos' salary?

Filipinos are now curious about investing to UITF or Mutual Funds

Popular post

Blog Archive

Followers

Test Footer

Test Footer 1

Test Footer 2