Personal Finance

As the saying goes, “There are only three certain things in life: death, taxes, and…” actually, I forgot the other one. We can’t do anything about leaving planet earth, or having some of your money taken by the government. While we can’t be certain where our taxes go, there’s another way to give money to the government and then be assured of gaining money in return. Here’s where the retail treasury bonds from the government, which is currently being offered until next week, comes in the picture.

Retail treasury bonds 101

Retail treasury bonds are investment instruments issued by a country (in this case, the Philippines) through its treasury department. Put simply, the government borrows money from you, and it will pay you back, with interest. You usually hear the term “treasury bonds” with topics about big-time investors, but from time to time, the government wants you to do some investing yourself. For a change, get some extra money from the government, instead of the other way around (although they are getting money from you at first).

The government recently launched an offering of retail treasury bonds, which runs from September 6 to 16. And for as low as ₱5,000, you can get this bond, through one (or more) of the 15 designated selling agents* for this offering. The maturity date of this offering is 10 years after the issuance date, which is set on September 20. Be aware though that the government doesn’t issue these bonds often; the last time it offered retail treasury bonds was in 2013.

Perks of investing in the government

Here’s the good news: the treasury bond is one of the safest investment vehicles around, because when the government borrows from you, it is obligated to pay you back, with interest. For this particular issuance of retail treasury bonds, the yearly fixed interest rate is 3.5%. So if you have ₱5,000 in bonds, the government will pay you ₱175 per year (subject to a minuscule tax though, darn), in addition to the ₱5,000 it borrowed upon bond maturity. Not bad, considering most savings accounts only pay out 1% annual interest or even less on their savings accounts. As a bank officer told me, this bond is like a jacked-up version of the time deposit.

In addition, retail treasury bonds are tradable anytime, subject to prevailing market prices. So anytime you need emergency money, you can sell the bonds and let it go, perhaps easier than letting go of a crush.

Necessary paperwork: What's a government without it

Now here comes the relatively hard part: government-related transactions tend to involve some paper and red tape. This one is no exception, though you have less to worry about than the usual tax filing.

When you want to buy bonds, you need to create a securities account for tax tracking with the Bureau of Treasury. Creating this account, which allows you to buy the bonds, involves getting these two docs: the special power of attorney, which allows the bonds’ selling agent to act as an investor on your behalf in buying government bonds, and the investor’s undertaking document, which appoints the Bureau of Treasury as the third-party custodian of the bonds.

After securing those documents, the selling agent, usually a bank, requires you to have an account with them. After all, the interest you’ll earn quarterly from the bond and the maturity payment 10 years after (provided that you held on to the bonds like the clingy lover that you are) will go straight to that account. Also, it’s a joy to actually get money from the government because of your savvy investment skills.

And that’s how to take some money from the government for a change (is coming).

Who are the selling agents?

Designated selling agents include BDO Unibank, Chinabank, Citibank, Development Bank of the Philippines, East West Bank, Land Bank, Metrobank, Philippine Bank of Communications, RCBC, Security Bank, ING Bank, BPI Capital, First Metro Investment, Robinsons Bank, and BDO Capital.

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