Question: Why are interest rates in the banks so low? Will it go up anytime soon and what are the alternatives so my money can earn better?—Dennis Poliquit, Radio DJ

Answer: Dennis, your question is one that you can call a ‘loaded’ question, so to speak (pun intended). Let me try to simplify my answers because the way most people explain it can cause many a nosebleed, me included. In economic terms, interest rates are largely a function of the government’s monetary policy with the central bank as its chief implementor. The government, through the central bank, tries to influence the economy by manipulating interest rates according to the direction of its economic managers. When the government wants money to circulate in the economy, it tries to keep interest rates low with the belief that money will be spent and invested in businesses that drive economic growth. When interest rates are low, people are discouraged from keeping their money with the government, which is the safest and largest borrower through the sale of government securities (debt instruments).

When the government wants to control the cash circulating in the economy, it increases interest rates and you can expect the market to start putting more money in government debt paper because of its low risk. The interest of government securities, also called treasuries (bills, notes and bonds), is also the basis…

To read full column, visit http://business.inquirer.net/7863/why-are-interest-rates-so-low

I just finished a Practical Finance Seminar in Singapore a few hours ago and it’s inspiring to see a few dozen Filipinos working hard outside the country, sacrificing and doing their best to have a better life. It is even more encouraging to see them getting financially educated even if they have to listen to a boring speaker like me. Sights like this makes my job fulfilling and keeps my passion burning to help Filipinos get more and more financial education.

I saw a tweet from my good friend Susan Ople of the Blas F. Ople Policy Center where she stated statistics on OFW remittances that blew my mind away. She stated that in 1975, the remittances amounted to US$ 103 Million. Today, remittances are now up to US$ 2 Billion a month!

Unfortunately, I need to state some facts that continues to disturb me and should disturb every other Filipino. A recent study conducted to determine the financial quotient of Filipinos revealed that only 1 out of 10 Filipinos prepare for retirement. NEDA numbers placed the average savings rate of the Philippines at 16% as compared to Indonesia, Malaysia, Thailand, Hong Kong and our other neighbors well above 30%. Less than 50% of Filipinos actually own their home, and that includes those whose homes are mortgaged. Less than 0.5% of Filipinos invest in the Stock Market. Less than 15% of Filipinos (family heads) own Life Insurance. Investments in pooled funds (Mutual Funds, UITFs, Variable Life) remains to be amazingly low.

With the huge amount of remittances being sent to the country in the last 30 years, one would assume that Filipinos today would have more money and a vast majority of our population would have a secured financial future. With the facts I wrote, it seems that money being sent home plus the money being generated at the home front does not end up being put to good work by saving and investing it. Our capital markets continues to be underdeveloped despite the nation having excess liquidity. If money is not being invested for the future, then one can logically assumed that almost all the money now is being used for consumption. The level of consumption of the country has reached an alarming rate juxtaposed with dismal savings rates being experienced.

Why is this so? I dare say that despite an increase in income, us Filipinos have yet to fully develop our zest for financial education. Financial literacy is a political, cultural and social issue — one that must be given preferential attention by every Filipino. If not, all the growth in remittances coupled by improvement in local income will be for naught if one will not have a secured future.

Despite the daunting task, I and a number of passionate people will continue to advocate financial education despite the odds even if it take one Filipino at a time. I pray that more and more will heed the call to do our part in bringing about a big change in our attitudes about money and heed the path towards Financial Peace.

MONEY MATTERS
Is investing in a condo unit a good idea?

By Randell Tiongson

Philippine Daily Inquirer
First Posted 21:29:00 05/03/2011

Filed Under: Investments, Personal Finance, House-Buying – Selling, Real Estate

QUESTION: Is a condo unit a good investment?—Mia Eugenio Marinez via Facebook

Answer: It depends. If you ask real estate brokers, they will tell you that investing in condominium units is the greatest thing since sliced bread. However, many investment experts seem unimpressed with returns from condominium investments and for a good reason.

The bigger question to ask is why are you consideringpurchasing a condominium unit? Is your purpose purely for capital gain or do you intend to live in that condo? I always say that when we select our investment options, we need to take a closer look at our investment objective, risk tolerance and time frame.

In this case, are you already certain as to the three I mentioned?

Assuming that you…

Read full column at http://newsinfo.inquirer.net/breakingnews/nation/view/20110503-334406/Is-investing-in-a-condo-unit-a-good-idea