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Have you ever thought of on how will you invest your money if ever you will have half a million of pesos? There are several options on where to invest, there are bank deposits, mutual funds, government and corporate bonds, or you can even buy stocks. With this several options, the problem would be on deciding on where to invest. Of course, you wouldn’t want to risk your money so you will definitely try to figure out which is the least risky from the choices. In addition, you may also want to determine which investment will give the best return. Before deciding, you must always think of the rule of thumb that is, in order to compensate any erosion in the worth of your money, the return must be higher than the inflation rate.

From these different options, the safest choice will be the deposits because an insurance of up to P250, 000 are given. This insurance could even rise up to half a million pesos if ever the legislators from the House of Representatives will be successful in passing the bill raising the maximum amount of deposit insurance.

Aside from the options cited above, there is also the Special Development Account which was fortunately opened by the Bangko Sentral ng Pilipinas or BSP both to government and trust institutions. If ever you decide to choose this option,all you need to do is to go to banks where SDA is offered because not all banks offer this kind of deposits.

In 2006, trying to surpass inflation without raising its overnight borrowing and lending rates, as well as to get through excess liquidity in the financial system, the BSP introduced the SDA. However, before you can deposit in SDA, you must have at least P100, 000. According to Land Bank of the Philippines Investment and Trading Department Head, Josefino P. Cerin, the facility is deemed to be very profitable due to high interest rates that it offers. And with the central bank as its counter party, it is considered to be very safe. Cerin also added that at present, only 14-day and 30- day windows are available.

An interest of 5.265% for 14-day SDA and 5.875% for 30-day SDA is offered as of December, 2008. These interest rates are fastened on the central bank’s overnight borrowing rate. A 20% withholding tax is subject to the interest income.

Backed by the BSP and with better offer rates to compare to deposits, SDA is a secure investment!

You may contact Bangko Sentral for more information at:

Bangko Sentral ng Pilipinas
A. Mabini St. cor. P. Ocampo St., Malate Manila
Phone : (02) 524-7011, Fax: (02) 523-6210
E-mail: bspmail@bsp.gov.ph
Web: www.bsp.gov.ph