2015’s OFW remittances amounted to about USD25.76 billion, a marked increase from the USD24.63 billion back in 2014. If you think that’s huge, we haven’t even factored in the amounts sent via informal means (e.g., through a relative or a friend going home for a visit), which are sure to inflate that number even further.
And yet, if the Philippine Statistics Authority is to be believed, only two in every five OFW’s are able to save (let alone invest) money. Now, if your goal is to provide a better life for your family AND eventually go back home to them for good, that’s not a good sign. The only way you can accomplish that is if you set up investments in the Philippines that will generate enough cashflow to equal or exceed your OFW income.
Fortunately, there are numerous ways for you to do this, and you can opt for any combination of the following to achieve your goals:
1. Unit Investment Trust Funds (UITF)
Arguably the safest and easiest investment on this list, UITF’s involve holding a certain amount of money in a trust. Fund managers are the ones who handle the money, which is portioned into unit investments, hence the name.
Most of the accredited banks in the Philippines like BDO, Metrobank, BPI, and so on already offer UITF packages catering to different risk levels. If you already have an existing account with any of them, you shouldn’t be more than just a couple of steps away from investing in a UITF. You can either ask your bank manager or check your bank’s official website or app for more details on this one.
2. Mutual Funds
Mutual funds vie with UITF’s for the top spot on the list of safest and easiest investments. They give you instant diversification with minimal risk and effort since like UITF’s, fund managers are the ones who will be monitoring and growing your money.
There are various mutual fund companies that sell shares for low, medium, and high-risk investments, but you can also ask your insurance agent about how you can invest in their company’s mutual funds. (Don’t forget to arrange for life insurance while you’re at it.)
This is yet another relatively low-risk investment vehicle for OFW’s who like to park their money in bank accounts. Bonds are offered to the public by large corporations and government treasury offices in order to raise funds. These come with fixed maturity dates, grow your money at higher interest rates than standard time deposits, and are less risky than stock market investments since returns are practically guaranteed.
Most accredited Philippine-based banks can give you options for this type of investment, and bonds are a great way to complement existing mutual fund or UITF holdings.
The stock market poses a higher risk for investments as compared to the previous three on this list, but it also offers an exponentially higher rate of return, provided that you take a bit of time to understand how it works before investing in it.
Essentially, buying shares of a company listed on the stock exchange makes you a part owner of the company. The more shares you purchase, the bigger your dividends will be. However, what makes the stock market risky is that certain events like natural disasters or political upheaval can cause drastic fluctuations in the share prices of your chosen companies.
Unless you want to spend a great deal of time studying complex stock market trends and several hours per day monitoring the Philippine Stock Exchange’s performance, it would be best to invest only in established companies that are likely to be around for the foreseeable future.
5. Real Estate
Many OFW’s like investing in real estate (hence the condominium-building/buying/selling boom), and with good reason. The value of land can usually be counted on to increase since its quantity remains constant even as the population increases. More people will simply need more places to live in, and as less land becomes available for that purpose, the higher the prices it can command in a fair market.
However, bear in mind that a real estate investment should serve at least one of two purposes: 1.) to be sold once its value goes up to a certain amount, and 2.) to be leased out for rental income. If you buy or build a house for your family to relocate to, that doesn’t count as an investment since the property won’t put money in your pocket (unless you plan to sell it and relocate elsewhere after its value increases).
Putting up a business is still the best way to shorten your years of OFW exile abroad because it can potentially give you a generous and continuous revenue stream. On the other hand, it’s pretty challenging for many migrants to explore this option since they wouldn’t be around to run it, and finding someone who is both trustworthy and able to do just that isn’t always a given.
Fortunately, the Internet provides many enterprising OFW’s with the tools to set up and monitor online businesses from anywhere in the Philippines. You still need to partner with someone capable and reliable to do the legwork back home, but at least you’ll be able to pretty much run your enterprise as you deem fit.
Lastly, do your homework before plunking serious money down on any investment. OFW’s are ripe targets for many scammers, so be wary of schemes that seem to promise you the moon in exchange for “just a few pennies.” Consider too your appetite for risk and your timeline for cashing in on your investments to better decide on which option/s is/are best for you. A consultation with any qualified financial advisor ought to help you determine such.
Leaving your family behind to provide a better life for them is hard enough. Having a definite plan for making your OFW remittances work hard for you ought to ease the pain of separation, simply because it will enable you to look forward to a specific date when you’ll all be able to enjoy the fruits of your labor together.