More overseas Filipino workers (OFWs) and their households are increasing their savings and prioritizing education and retirement. However, only a few use OFW investment opportunities to achieve their long-term financial goals.

The 2022 Bango Sentral ng Pilipinas (BSP)’s Consumer Expectations Survey revealed that only one in 10 OFWs (or 10.9%) invest. Most keep their savings in bank accounts or start a home business to supplement earnings.

Why are OFWs afraid of investing? Even though they know it’s a good way to build wealth, some are afraid of the risks, while others think they need a lot of capital. But investing is not as complicated as people think!

There are many kinds of investment tools. You can pick those that suit your financial situation, comfort level and goals. Use this introduction to OFW investment opportunities to see what’s available and take the first steps towards building your portfolio.

Stocks

When you buy stocks, you own a piece of that company. Ownership is represented by shares—the more shares you have, the larger your ownership stake.

The stock value goes up if the company performs well or if there is a high demand for its stocks.

Profits and how to manage risks

There are two ways to earn money from stocks: when the company can share profits with shareholders (called dividends) or when you sell your shares at a higher price than you originally invested (called capital gains).

Stock prices can be volatile, so you may lose money when there is a market downturn. You can manage your risk by having a diverse portfolio that includes stocks in different industries and other investments like bonds.

You can also buy stocks in a company that has a long-term potential for growth. Its stock values may sometimes dip because of market fluctuations but are more likely to recover and increase because of the company’s steady performance.

How to start investing

Philippine stocks are traded, or bought and sold, at the Philippine Stock Exchange (PSE). You can get a stockbroker, who will open a trading account for you and execute stock trades based on your orders.

You can also manage your stocks yourself through online platforms like BPI Trade. You can view stock market prices, buy and sell, and transfer your funds all from an app.

Bonds

When you buy bonds, you lend money to the issuer, which can be a company or the government. The issuer then pays you periodic interest (called coupon payments) and returns the money you lent when the bond matures.

Potential profits and risks

You can earn from interest or from capital gains when you sell the bonds before their maturity date.

Bonds generally have lower returns than stocks. However, your income is more predictable because you know the interest rates, maturity date, and coupon payment schedules (generally quarterly or semi-annually).

Bonds are best suited for those who want OFW investment opportunities that will generate regular cash flow and moderate returns. They are an excellent alternative to time deposits.

How to start investing

Buy corporate and government bonds from your local bank. You can either select specific bonds or join a bond fund where a fund manager will pool your investment to buy a variety of bonds.

Mutual Funds and UITFs

Mutual funds and unit investment trust funds (UITFs) are like big baskets with different investments like stocks and bonds. A professional fund manager pools money from investors, then selects the investments based on the fund’s goals.

For example, a fund that focuses on capital appreciation will have stocks with high growth potential. Meanwhile, one intended for income generation will lean towards assets that generate interest and dividends.

While mutual funds and UITFs work the same way, mutual funds are managed by insurance and investment companies, while IUTFs are managed by banks and trust corporations.

Potential profits and risks

If you’re overwhelmed by the different OFW investment opportunities, or simply have no time to monitor market fluctuations or study different stocks, then a mutual fund may be a good choice for you. The fund manager does all the work for you.

You just need to choose a mutual fund based on your investment goals and tolerance for risk. Some funds let you invest as low as ₱5,000 to ₱10,000. However, your returns depend on the number of shares or units you own.

Mutual funds and IUTFs also invest in different types of assets, which spreads out your risk and balances out market fluctuations.

How to start investing

Contact your bank or insurance company to find out about their different types of funds. The fund manager can recommend the best fund for your financial goals and answer your questions about its risks and returns.

VUL insurance and investment

Variable Universal Life Insurance (VUL) is a life insurance plan that invests a portion of the premium. Unlike other insurance plans that have fixed cash value, you may be able to earn more depending on the market.

VUL is one of the most cost-effective OFW investment opportunities since you get both health protection and investment benefits. This makes it an excellent choice for retirement planning, since you can prepare for possible critical illnesses and add to your retirement fund.

Potential profits and risks

Like mutual funds, VUL’s potential for returns and risks depends on the market conditions and the mix of investments. However, it provides benefits that may appeal to someone who is new to investing.

• Flexibility: You can adjust your policy and the cost of your premiums based on your financial conditions and goals.
• Liquidity: You can withdraw some of its cash value, use its cash value to pay for premiums, or surrender the policy when you need emergency money.
• Tax benefits: Unlike other investments like property or stocks, proceeds from VULs are not subject to estate tax. If anything happens to you, your dependents can receive the full death benefit without any deductions.

How to start investing

Read more about variable life insurance and other insurance options from BPI AIA. You can also drop by any BPI branch and speak to a Bancassurance representative about different OFW investment opportunities.

PAG-IBIG MP2 Savings

The PAG-IBIG fund (or the Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno fund) is a government-run savings program. You contribute part of your income and build a fund which you can use for housing loans and personal loans.

The PAG-IBIG MP2 (Modified PAG-IBIG 2) provides an additional savings option with higher returns and dividend rates. You can choose from different savings terms from five to 10 years. The minimum contribution is ₱500, and there is no maximum limit.

Potential profits and risks

PAG-IBIG MP2 savings are guaranteed by the government. Dividends are tax-free and can be withdrawn annually or after it matures in five years.

How to start investing

Any PAG-IBIG member can join the MP2 savings and investment program. OFWs can remit payments through authorized online payment channels or authorized overseas collection partners or ask relatives to pay on your behalf at any PAG-IBIG branch.

You can make regular payments or make a lump sum payment for five years. Visit the PAG-IBIG website for more information.

Real estate

Many OFWs invest in real estate property. Unlike other OFW investment opportunities, it’s a concrete and tangible representation of how all your hard work and sacrifices paid off. You can finally buy your dream home. You can give your kids a concrete legacy or mana. You can rent out the property, sell it at a higher price, or use it for business purposes like a store or franchise.

Potential profits and risks

Real estate creates many opportunities to earn, especially if you pick the right location. However, it requires high capital investment, long-term financial commitment and clear goals.

It’s important to set clear investment goals. What do you want to do with the property? Is it for residential or commercial use, and what size or location suits your budget and needs? Do you intend to keep it or resell it at a higher value? What’s your budget for the downpayment, monthly amortization and other costs like construction and interior design?

Also remember that real estate isn’t as liquid as other OFW investment opportunities. This means that you can’t convert it into cash right away, because you must find a buyer and finish paperwork before you finish a sale.

How to start investing

Before signing any contract, make sure that you are talking to either the property owner or a licensed real estate agent. Then, go to the Registry of Deeds and request a certified true copy of the title. Check if there are any legal issues or claims.

Emergency funds

While some insurance policies grow your wealth, others focus on protecting you from the financial impact of medical expenses or sudden loss of income. You’re investing in your peace of mind: whatever happens, my family will be okay.

For example, insurance plans like Pamilya Protect provides an emergency fund in case you get sick, injured or disabled. If you pass on, your family will receive a death benefit up to two million. They can use the money to settle debts and estate taxes or pay for living expenses.

Investments and emergency funds complement each other to form a comprehensive financial safety net for you and your family.

Explore OFW investment opportunities

Investing can help you grow your money and build a comfortable future for you and your family. Schedule an appointment with BPI AIA Bancassurance Sales Executives to start your investing journey today.

References

• Overseas Filipinos urged to save and invest for retirement. (2021, July 8). Department of Trade and Industry. Retrieved February 13, 2024, from https://www.dti.gov.ph/archives/overseas-filipinos-urged-to-save-and-invest-for-retirement/
• Agcaoili, L. (2022, June 5). More households turning to savings, investments. Philstar.com. https://www.philstar.com/business/2022/06/06/2186262/more-households-turning-savings-investments
• Pag-IBIG Fund MP2 (Modified Pag-IBIG 2) Savings. (n.d.). Pag-IBIG Fund. Retrieved February 13, 2024, from https://www.pagibigfund.gov.ph/Membership_ModifiedPagIBIG2.html