Investing in the Retail Treasury Bonds – April 2017 Issue

While waiting in line to make a deposit at Banco De Oro (BDO), my random gaze at their TV monitor was hooked by their video on Retail Treasury Bonds, or RTBs.  It was a very compelling video because it enticed the viewer with a bold promise to make the viewer’s peso investment earn dramatically more than a peso time deposit.

Definitely intrigued, I waited impatiently to finish my business at the bank’s branch and hurry home to do my own research.

A quick search through the internet immediately brought me to the webpage of our Bureau of Treasury (Philippines) where indeed they were flashing a comparative calculator on possible earnings with a Retail Treasury Bond, or RTB, versus a Time Deposit.

And this was what I gathered:  with a probable investment of PhP50,000, an RTB would give me an annual net return of PhP1,700 at 4.45% interest (gross) versus the PhP400 net annual return on the same amount with a Time Deposit at 1% interest (gross). Source

Definitely intrigued at the possibility of earning around four times more on my peso investment, I decided to talk to my friendly BDO manager to find out more about RTBs and why there was the promise of bigger earnings.

What are Retail Treasury Bonds?

Retail Treasury Bonds or RTBs belong to a basket of low-risk investment options.  RTBs are low-risk investments because they are a kind of government security that is defined to be “long-term, low-risk instruments that are direct and unconditional obligations by the Philippine government”.

And because it is a bond, RTBs also offer fixed incomes determined by specified interest rates with identified timing of payment of interest and principal. The Bureau of Treasury issues retail Treasury Bonds.

April 2017 RTBs

The April 2017 RTB issue is part of the National Government’s campaign to encourage more Filipinos to be more aware of the nuances of investing, and hopefully realize how they can make their money “work harder” and thus earn more.  The April 2017 RTBs are characterized to have the following key features:

  • RTBs can be availed through merchants called Joint Lead Managers (First Metro Investment Corp. and Land Bank of the Philippines) and Joint Issue Managers (BDO Capital & Investment Corp., BP Capital Corp., Development Bank of the Philippines, China Bank Capital Corp., and SB Capital Corp.)
  • Minimum investment is PhP5,000. Bigger investments can be made in increments of PhP5,000.
  • Interest rates are pegged at 4.25% gross per annum, subject to a 20% withholding tax. Interest payments will be made quarterly, deposited directly to the savings account held by the investor at the Joint Issue Managers’ banks.
  • Holding period is 3 years.

RTBs

How to Purchase a Retail Treasury Bond

After getting the inside info on what an RTB was about, I decided to put in a modest PhP20,000 investment.  I am still a newbie investor, after all, and still a bit prudent and skeptic about investment instruments and get-rich quick schemes.

Because I was already a BDO account holder, investing in the April 2017 RTB issue was easy.  I approached my Trusts and Investments Manager at my branch and mentioned that I wanted to invest PhP20,000.

Upon confirming the amount I wanted to invest, I was given a caveat to wait for 24 hours to get the final confirmation from the merchant’s end on the final amount I could put in (I was told that it could be smaller than the PhP20,000 I wanted, depending on several variables which were not clarified at time of purchase).

I then filled out several documents that were mostly bank-issued documents and a couple of documents issued by the Bureau of Treasury, one of which had to be notarized.  Notwithstanding the caveat to the 24-hour investment confirmation from the bank, everything was accomplished under an hour.

My RTB Investment

Investing in RTBs was a walk in the park, so to speak.  Now all I have to do is wait every quarter and check my savings account for the payout on the interest of my investment for the next 3 years.

In the meantime, I will now be on the lookout for other investment options that might fit my needs.  Indeed, this initial foray into getting an RTB has opened up my antennae for looking out for ways to make my money work harder for me.

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