Do you want to earn fixed income this 2018? Then you should read these guides I made on how to invest Retail Treasury Bonds in the Philippines, also known as RTBs. RTBs are one of my favorite investments simply because they generate fixed income. To learn a brief information about what RTBs are, read on…
Retail Treasury Bonds Meaning
What are Retail Treasury Bonds? RTBs are types of fixed-income investments issued by the Philippine government to make securities available for small investors.
“Retail” meaning, they cater to the retail market or small investors. “Treasury” meaning they administered by the Bureau of Treasury. “Bonds” meaning they are types of bonds, they pay a fixed amount of interest per annum with a predetermined maturity date.
In a nutshell, you lend the government your money and in return the government will pay your money on the maturity date plus fixed interests every quarter. How is that sound?
Why you should Invest in Retail treasury Bonds?
Unlike stocks, mutual funds and UITFs, RTBs are low-risk investments because they are fixed income and backed by the full taxing power of the government. To summarize the benefits and why you should invest in RTBs, see my list below.
Retail Treasury Bonds Benefits
Very Low Risk – like I mentioned, RTBs are low risk investment to the point that many people call them “risk-free” investments. But of course, there is nothing like risk-free money wheel. Since RTBs are back up by the government, it is almost impossible to lose your money because the government will always find a way to issue money or do some ways to earn some.
Affordable – you can invest RTBs for as low as P5,000 in the primary market. Keep in mind though that since RTBs are low-risk, you should not expect higher interest rates or earnings. What matter is the more you invest, the better.
Easy to Open – RTBs are easy to open. The Bureau of Treasury authorize our well known banks to issue and offer RTBs to the public. All you have to do is find out the offer period for RTBs and go to your bank to reserve how much you want to buy.
Regular Earnings – when you have Retail Treasury Bonds, you will receive interest payments quarterly based on the principal market rate you have signed up for.
How to Invest Retail Treasury Bonds in the Philippines
First, find out if the Bureau of Treasury is offering upcoming Retail Treasury Bonds. Because these are big opportunities, we made the latest list at this link: RTB Offering 2018
If there are available RTBs, then proceed to your bank and approach a Trust representative or any staff under the Asset Management Group or Trust Group. Tell them you are interested to invest in Retail Treasury Bonds.
Bring some docs like your valid IDs, your bank account (usually your settlement account), and make sure you know your TIN (Tax Identification Number). Opening Retail Treasury Bonds requires a lot of papers and documents to be filled out and signed so make time for it. The bank agent will give you the documents you need to fill out and sign. They are usually the ones listed below.
Requirements to Invest in Retail Treasury Bonds
- Bureau of Treasury (BTr) Investor’s Undertaking
- Special Power of Attorney
- Client Suitability Assessment Form
- Risk Disclosure Statement
- Client Agreement
- Checklist
- Order Ticket
- Data Privacy Form
- Others as may be required by the Issuer or bank
Retail Treasury Bonds Earnings
How much money will you earn investing Retail Treasury Bonds? Since RTBs are low risk investments, they also generate low returns and low interest rates compared to stocks, mutual funds and UITF investments. The latest RTB issue rate is 4.875% per annum. That is really not low income if your principal is 1 million or above. If you invested 1 million for example, you’ll get around 117,000 effortlessly.
If you invest in RTBs, you earn fixed income for medium term. You don’t worry so much because the guarantee you will have your money back plus interest is almost 100%.
Retail Treasury Bonds Calculator
Here’s a sample calculator from the Bureau of Treasury using the recent interest rate. Returns displayed assume an interest period of three years and are net of 20% final withholding tax. 365-day time deposit rate assumed is 2.650%
Retail Treasury Bonds Bank Agents
List may change anytime
BDO
BPI
PNB
Metrobank
Landbank
Security Bank
Bank of Commerce
China Bank
DBP
PB Com
RCBC
Unionbank
Thank you. This will be my first to invest on something. I’ll choose RTBs first to gain experience.
What is the difference between treasury bills and treasury bonds? Thanks po.
Hi, Jaye 🙂 Thanks for visiting! Treasury Bills are short term investments, usually with a tenor of less than one year, thus with lower yield. On the other hand, Treasury Bonds are medium to long term investments, usually more than one year and with higher yield or earnings