Do you want to earn fixed income this 2020? Then you should read these guides I made about how to invest Retail Treasury Bonds in the Philippines, also known as RTB. RTB are one of my favorite investments simply because they generate fixed income. To learn a brief information about what RTB are, read on…
What are Retail Treasury Bonds?
Retail Treasury Bonds 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 should you Invest in Retail treasury Bonds?
Unlike stocks, mutual funds and UITFs, RTB 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 RTB, see my list below.
Retail Treasury Bonds Benefits:
- Very low risk
- Affordable
- Easy to open
- Regular earnings
Very Low Risk – like I mentioned, RTB 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 RTB 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 RTB for as low as P5,000 in the primary market. Keep in mind though that since RTB are low-risk, you should not expect higher interest rates or earnings. What matter is the more you invest, the better.
Easy to Open – RTB are easy to open. The Bureau of Treasury authorize our well known banks to issue and offer RTB to the public. All you have to do is find out the offer period for RTB and go to your bank to reserve how much you want to buy.
Regular Earnings – when you have this type of investment, 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?
Step 1: Check for Available RTB Offering
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
Step 2: Open your RTB Investment
If there are available RTB, 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.
Step 3: Submit your Documents
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
The required documents above are usually provided by the issuer or bank and you need to fill and sign them up.
How much will you earn if you invested in RTB?
Since RTB 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 RTB, 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%
Where to open RTB in the Philippines?
The following universal banks offer Retrail Treasury Bonds in the Philippines. These banks are authorized by the Bureau of Treasury to cater to people interested to invest with RTB.
- BDO
- BPI
- PNB
- Metrobank
- Landbank
- Security Bank
- Bank of Commerce
- China Bank
- DBP
- PB Com
- RCBC
- Unionbank
In your example computation of RTB earning for One Million at 4.875% interest rate p.a., the interest is about 117k. I cannot arrive at this value in using compound interest formula. How do you compute the interest?
48750 peso/ yr times 3 years less 20% withholding tax gets you to 117,000 peso profit
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