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Financial Literacy CampaignFinancial Literacy Campaign
The Philippine Consulate GeneralThe Philippine Consulate GeneralJeddahJeddah
Kingdom of Saudi ArabiaKingdom of Saudi Arabia24 April 200924 April 2009
InvocationInvocation
National AnthemNational Anthem
Welcome RemarksWelcome Remarks
Consul General Ezzedin H. TagoConsul General Ezzedin H. TagoPhilippine Consulate GeneralPhilippine Consulate General
JeddahJeddah
Audio Visual PresentationAudio Visual Presentation
Paghahanda Sa KinabukasanPaghahanda Sa Kinabukasan
The BSP’s The BSP’s Financial Learning Financial Learning Campaign (FLC)Campaign (FLC)
DEPUTY GOVERNOR DIWA C. GUINIGUNDODEPUTY GOVERNOR DIWA C. GUINIGUNDO
2222--25 April 200925 April 2009
Kingdom of Saudi ArabiaKingdom of Saudi Arabia
88
OutlineOutline
I.I. ImportanceImportance ofof RemittancesRemittances
II.II. SignificanceSignificance ofof FinancialFinancial PlanningPlanning
III.III. TypesTypes ofof FinancialFinancial InstrumentsInstruments
IV.IV. Source of Financing for Business Source of Financing for Business
11
Importance ofImportance ofRemittances Remittances
Benefits of RemittancesBenefits of Remittances
•• Promote economic activity through higher Promote economic activity through higher consumption consumption
•• Generate employmentGenerate employment
•• Increase foreign exchange supplyIncrease foreign exchange supply
•• Contribute to savingsContribute to savings
•• Provide Provide additional funds for the governmentadditional funds for the government
Remittances can be harnessed for investments, in theform of:
� human resource capital investments through education and
health care for beneficiaries;
� physical capital investments through acquisition of real
properties, including land purchases and home construction;
� financial capital investments through savings in bonds and
other financial instruments; and
� investments in business ventures such as in small- and
micro- enterprises (SMEs).
1111
22
Significance ofSignificance ofFinancial PlanningFinancial Planning
1313
ImportanceImportance
1.1. ToTo savesave forfor thethe futurefuture
2.2. ToTo acquireacquire protectionprotection againstagainst unforeseenunforeseenuntowarduntoward eventsevents
3.3. ToTo achieveachieve financialfinancial independenceindependence
FINANCIAL PLANNINGFINANCIAL PLANNING
Three STEPS to achievingThree STEPS to achievingFINANCIAL FREEDOMFINANCIAL FREEDOM
11PlanPlan
22SaveSave
33InvestInvest
SettingSetting--up Family Goalsup Family GoalsFamily goals are usually centered on the following:
a. Education
b. Housing
c. Health
d. Retirement
e. Protection against unforeseen events
YOUR FINANCIAL PLANYOUR FINANCIAL PLAN
IMMEDIATELYIMMEDIATELY
Graduation FundGraduation Fundfor Child 1for Child 1
(P 50K)(P 50K)
2 years2 years
Build DreamBuild DreamHouseHouse
(P 3 Mn.)(P 3 Mn.)
10 years10 years
Funds forFunds forBusinessBusiness
UndertakingUndertaking(P 100K)(P 100K)
TIMELINETIMELINE
LIFE LIFE GOALSGOALS RetirementRetirement
FundFund(P 3 (P 3 MnMn.).)
20 years20 years
� Create a timeline on when you want it to happen
� Specify amount needed
Why Families are not able to SaveWhy Families are not able to Save
a. Dependency on family member working overseas
b. Luxurious lifestyle
c. Other family issues that drain resources
� Early marriage� Family break-up� Lack of interest in school� Personal problems, vices
1818
FINANCIAL PLANNINGFINANCIAL PLANNING
Income Income –– Expense = Expense = Savings Savings
Income Income –– Savings = Savings = ExpenseExpense
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1919
April 2009April 2009
IncomeIncome
Target Savings Target Savings xxxxxx
ExpensesExpenses
FoodFood
School AllowanceSchool Allowance
Electricity Electricity
WaterWater
TransportationTransportation
ClothingClothing
EntertainmentEntertainment
OthersOthers
Can be used for:Can be used for:
1.1. Tuition feesTuition fees
2.2. HousingHousing3.3. InvestmentsInvestments4.4. Business Business
ventureventure
33
Types of Financial Types of Financial InstrumentsInstruments
PESO REMITTANCEPESO REMITTANCE
CONSUMPTIONCONSUMPTION SAVINGSSAVINGS SMEs/MICROFINANCESMEs/MICROFINANCE
Bank instruments (TD/SD/Bank instruments (TD/SD/
Mutual funds/UITF)Mutual funds/UITF)
Savings in CooperativesSavings in Cooperatives
TD/SDTD/SD
Treasury instrumentsTreasury instruments
TT--bills, RTBs, Tbills, RTBs, T--notesnotes Stock MarketStock Market
Insurance (life, nonInsurance (life, non--life,life,
Education, pension)Education, pension) Real EstateReal Estate
OthersOthers
AgriAgri--businessbusiness
Retail businessRetail business
Lending businessLending business
OthersOthers
2121
2222
1.1. Savings DepositSavings Deposit
2.2. Time Deposit Time Deposit
3.3. TreasuryTreasury--bills bills
4.4. Retail treasury bonds (RTBs) Retail treasury bonds (RTBs)
5.5. LongLong--term Negotiable term Negotiable Certificates of Deposit Certificates of Deposit (LTNCD) (LTNCD)
LOWER YIELD BUT LOWER YIELD BUT GUARANTEED RETURN GUARANTEED RETURN
OF PRINCIPALOF PRINCIPAL
HIGHER YIELD BUT NO HIGHER YIELD BUT NO GUARANTEED RETURN OF GUARANTEED RETURN OF
PRINCIPALPRINCIPAL
1.1. MutualMutual FundsFunds
2.2. UnitUnit InvestmentInvestment TrustTrustFundsFunds (UITFs)(UITFs)
3.3. StocksStocks
4.4. InsuranceInsurance
RTBs TBills UITFs Mutual Funds
Variable Insurance
Who May Buy
Individual
Institutional
Where to Buy
GSEDs GSEDs Banks •Brokers
•Banks
•Ins.
agents
Insurance
cos.
Minimum Investment
P5,000 P100,000 P10,000 P1,000 ---
�������� �������� �������� �������� ��������
�������� ����������������
INVESTMENT INSTRUMENTS
As of February 6, 2009
RTBs TBills UITFs Mutual Funds
Insurance
Yield Fixed-
rate
coupons
Zero
coupon
NAVPU NAVPS NAVPU
Guaranteed Return of Principal
Yes Yes No No No
Tax Feature 20% 20% 20% --- ---
Holding Period
3 and 5
years
91-, 82-,
364- days5 to 365
days
--- ---
INVESTMENT INSTRUMENTS
RETAIL TREASURY BONDSRETAIL TREASURY BONDS
P30,000P30,000(investment)(investment)
x 5.875%x 5.875%(coupon rate p.a.)(coupon rate p.a.)
x 5 yearsx 5 years = = P8,812.50P8,812.50(total income)(total income)
AfterAfter--tax Income:tax Income:
Example: 5Example: 5--year RTB with 5.875% coupon rateyear RTB with 5.875% coupon rate
P8,812.50P8,812.50(total income)(total income)
-- P1,762.50 P1,762.50 */*/
(20% tax)(20% tax)
= = P7,050.00P7,050.00
*/ Credited quarterly
RETAIL TREASURY BONDSRETAIL TREASURY BONDS
Quarterly Coupon:Quarterly Coupon:
÷÷ 2020(# of quarters in 5 years)(# of quarters in 5 years)
= = P352.50P352.50/quarter/quarter
Return on Investment:Return on Investment:
= = P352.50P352.50 (proceeds per quarter)(proceeds per quarter) x x 100100P30,000P30,000 (initial)(initial)
P7,050.00P7,050.00(after(after--tax income)tax income)
= = 1.18% 1.18% per quarter for a 5per quarter for a 5--year RTB, year RTB, 5.875% coupon rate5.875% coupon rate
TREASURY BILLSTREASURY BILLS
Selling PriceSelling PriceFormula: Formula: SP = PP + [(PP) (SP = PP + [(PP) (ii) (h/360)]) (h/360)]ii = (SP = (SP –– PP) / PP x (360/h)PP) / PP x (360/h)
Where,Where,SP: selling priceSP: selling pricePP: purchase price PP: purchase price */*/
ii : yield for holding period: yield for holding periodh : holding period h : holding period
*/*/ Calculated based on present value formulaCalculated based on present value formula
TREASURY BILLSTREASURY BILLS
= = P18,005.25P18,005.25(discount/interest (discount/interest
earned)earned)
AfterAfter--tax Interest Earned:tax Interest Earned:
Example: 91Example: 91--day Tday T--bill at 13% yieldbill at 13% yield
P18,005.25P18,005.25(discount/interest earned)(discount/interest earned)
-- P3,601.05P3,601.05(20% tax)(20% tax)
= = P14,404.20P14,404.20
-- P981,994.75P981,994.75(selling price)(selling price)
P1,000,000.00P1,000,000.00(investment)(investment)
TREASURY BILLSTREASURY BILLS
Return on Investment:Return on Investment:
= = P1,014,404.20P1,014,404.20 (proceeds)(proceeds) –– P1,000,000 P1,000,000 (initial)(initial) x x 100100P1,000,000P1,000,000 (initial)(initial)
= = 1.44% 1.44% for a 91for a 91--day Tday T--bill, 45bill, 45--day holding period, 13% yieldday holding period, 13% yield
UNIT INVESTMENT TRUST FUNDUNIT INVESTMENT TRUST FUND
= 86,365.71= 86,365.71(units of participation)(units of participation)
Example: 30Example: 30--day UITFday UITF
÷÷ 1.1578671.157867(NAVPU)(NAVPU)
P100,000.00P100,000.00(initial investment on (initial investment on
Feb. 20, 2009)Feb. 20, 2009)
1.18671.1867(NAVPU)(NAVPU)
x 86,365.71x 86,365.71(units of participation)(units of participation)
P102,490.19 =P102,490.19 =(proceeds on investment (proceeds on investment
on March 22, 2009)on March 22, 2009)
Return on Investment:Return on Investment:
= = P102,490.19P102,490.19 (proceeds)(proceeds) –– P100,000P100,000 (initial)(initial) x 100x 100P100,000P100,000 (initial)(initial)
= = 2.49% 2.49% for a 30for a 30--day UITFday UITF
UNIT INVESTMENT TRUST FUNDUNIT INVESTMENT TRUST FUND
MUTUAL FUNDMUTUAL FUND
= 81,030.71= 81,030.71(shares)(shares)
Example: 60Example: 60--day Mutual Fundday Mutual Fund
÷÷ 1.23411.2341(NAVPS)(NAVPS)
P100,000.00P100,000.00(initial investment on (initial investment on
Feb. 20, 2009)Feb. 20, 2009)
1.26261.2626(NAVPS)(NAVPS)
x 81,030.71x 81,030.71(shares)(shares)
P102,309.37 =P102,309.37 =(proceeds on investment (proceeds on investment
on April 21, 2009)on April 21, 2009)
MUTUAL FUNDMUTUAL FUND
Return on Investment:Return on Investment:
= = P102,309.37P102,309.37 (proceeds)(proceeds) –– P100,000 P100,000 (initial)(initial) x x 100100P100,000P100,000 (initial)(initial)
= = 2.31% 2.31% for a 60for a 60--day MFday MF
MUTUAL FUNDSMUTUAL FUNDS
TypesTypesMedium to Medium to High RiskHigh Risk Low RiskLow Risk
Bond Funds (Fixed)
Money Market Funds
Equity (Stock Funds)
Balanced Funds
��������
��������
��������
��������
= 12,500= 12,500(units of participation)(units of participation)
Example: OneExample: One--year Variable Insurance with a P750,0 00 face amountyear Variable Insurance with a P750,000 face amount
÷÷ 1.89241.8924(NAVPU)(NAVPU)
P23,655.00P23,655.00(regular annual premium (regular annual premium
payment on Jan. 10, payment on Jan. 10, 2009)2009)
1.98741.9874(NAVPU)(NAVPU)
x 12,500x 12,500(units of participation) (units of participation)
P24,842.50 =P24,842.50 =(proceeds on investment (proceeds on investment
on Jan. 10, 2010)on Jan. 10, 2010)
VARIABLE INSURANCE / INVESTMENT VARIABLE INSURANCE / INVESTMENT LINKED INSURANCELINKED INSURANCE
Return on Investment:Return on Investment:
= = P24,842.50P24,842.50 (proceeds)(proceeds) –– P23,655P23,655 (initial)(initial) x 100x 100P23,655P23,655 (initial)(initial)
= = 5.02% 5.02% for a onefor a one--year Variable Insurance year Variable Insurance */*/
*/ */ Income could cover for future premiums Income could cover for future premiums
44
SSource of ource of FFinancing inancing for for BBusiness usiness
MICROFINANCE 101MICROFINANCE 101Broad range of financial services such as deposits, loans, payment services, money transfers and insurance products offered to the poor and low-income households for their small enterprises.
Unique Characteristics:• Open to small savers or micro-borrowers• Approval and disbursement of loans are fast • Individual borrowers can avail of loans • Grant of loans based on the borrowers’ and household’s expected project cash flow
• Small loans ranging from as low as P2,000-P5,000 to a maximum of P150,000 (collateral-free)
• Unsecured and short-term loans
BanksBanksNo. of No. of BanksBanks
Micro Loans PortfolioMicro Loans Portfolio Savings Savings Component Component (in millions)(in millions)Amount Amount
(in millions)(in millions)No. of No. of
BorrowersBorrowers
Microfinance Oriented Banks
Rural Banks 5 724.10 128,494 445.76Thrift Banks* 4 192.93 57,780 57.95
TOTAL 9 917.02 186,274 503.70
“Regular” Banks with Microfinance Operations
Rural Banks 167 4,046.63 580,532 1,073.99
Cooperative Banks 25 913.28 88,198 167.34
Thrift Banks 19 342.53 10,170 4.04
TOTAL 211 5,302.44 678,900 1,245.37
TOTAL 220 6,219.46 865,174 1,749.07
SNAPSHOT OF MICROFINANCE IN THE BANKING SECTOR SNAPSHOT OF MICROFINANCE IN THE BANKING SECTOR (As of 31 December 2008)(As of 31 December 2008)
CREDIT SURETY FUND PROGRAMCREDIT SURETY FUND PROGRAM
4040
• Allows MSMEs who are members of a cooperative to gain access to credit from banks in the absence of acceptable hard collaterals.
• MSMEs defined (under Small and Medium Enterprise Development Council Resolution No. 01 Series of 2003 dated 16 January 2003)
By Asset Size:Micro : Up to Php 3,000,000Small : Php 3,000,001 -- Php 15,000,000Medium : Php 15,000,001 -- Php 100,000,000Large : above Php 100,000,000
Based on the number of employees:Micro : 1 -- 9 EmployeesSmall : 10 -- 99 Employees Medium : 100 -- 199 EmployeesLarge : More than 200 Employees
CREDIT SURETY FUND PROGRAMCREDIT SURETY FUND PROGRAM
4141
• A multi-sectoral program composed of:
- Creation of a trust fund that will serve as security for the loans:(1) national government through the Industrial Guaranty and Loan Fund (IGLF)(2) the local government led by the Provincial Governor(3) MSMEs under the cooperatives
- Provision of loans:(4) participating banks
- Provision of rediscounting for up to 80% for the MSME loans(5) Bangko Sentral ng Pilipinas (BSP)
CREDIT SURETY FUND PROGRAMCREDIT SURETY FUND PROGRAM
4242
• Granting of Loans:
- Managed and administered at the provincial level to be more responsive to the credit needs of the MSMEs in each province.
- Loans to be approved by the CSF Oversight Committee
- Loanable amount: depends on the evaluated project loan proposal
- Interest rate: 8-12% per annum
- Additional fee: guarantee fee of 2-5% of the loan
- In case of borrower default, CSF will cover the debt while cooperatives will run after their members.
- Banks that extend loans secured by the CSF can rediscount up to 80% of such loans with the BSP.
CREDIT SURETY FUND PROGRAMCREDIT SURETY FUND PROGRAM
4343
• Participating Banks:
- Allied Bank- United Coconut Planters Bank- Land Bank of the Philippines- Development Bank of the Philippines- BPI Family Bank- Rural and cooperative banks with rediscounting line with the BSP
CREDIT SURETY FUND PROGRAMCREDIT SURETY FUND PROGRAM
4444
• Provinces that launched the program:- Cavite- Aurora- Bohol
• Provinces to replicate the program:- Davao City- Davao del Sur- Cotabato- Batangas- Bulacan- Laguna- Quezon- Mindoro
The Financial Learning Campaign is a flagship program of the BSP to promote Financial Planning, Savings and Investments
PERANG PADALA, BIGYAN PERANG PADALA, BIGYAN NG HALAGA,NG HALAGA,
TIPIRIN, PALAGUIN AT TIPIRIN, PALAGUIN AT PAGYAMANIN,PAGYAMANIN,
PARA MAGANDA PARA MAGANDA KINABUKASAN NATINKINABUKASAN NATIN !!
4646
Website:Website: www.bsp.gov.phwww.bsp.gov.ph
EE--mail:mail: [email protected]@bsp.gov.ph
Audio Visual PresentationAudio Visual Presentation
EntrepinoyEntrepinoy
Remittance & Investment Remittance & Investment Protection TipsProtection Tips
Dottie M. BernasDottie M. BernasBank Officer IIIBank Officer III
Bangko Sentral ng PilipinasBangko Sentral ng Pilipinas
Open ForumOpen Forum
Rosabel B. GuerreroRosabel B. GuerreroDeputy DirectorDeputy Director
Bangko Sentral ng PilipinasBangko Sentral ng Pilipinas
Closing RemarksClosing Remarks
Juanita D. AmatongJuanita D. AmatongMonetary Board MemberMonetary Board MemberBangko Sentral ng PilipinasBangko Sentral ng Pilipinas
Thank YouThank You