By Leslie Gatpolintan/Philippine News Agency
MANILA — One can start investing below PHP50,000 with guaranteed good rate of return without having to fear being duped into pouring in their hard-earned money to fraudulent schemes.
After the Kapa-Community Ministry International Inc. (KAPA) incident, the Securities and Exchange Commission (SEC) has intensified its crackdown against more groups allegedly employing a Ponzi scheme, or an investment program where investors are lured with impossibly high returns and paid out of the capital contributed by later investors.
KAPA was found to have recruited and encouraged members to “donate” any amount in exchange for a 30-percent monthly return for life, without having to do anything other than invest and wait for the payout.
“The rule of thumb is 5 to 6 percent per year. So anything above 6 percent you have to double-check kung sino nagbebenta talaga at kung mababayaran ka (who is really selling the financial instruments and if he can provide the payout),” said Eduardo Francisco, president of BDO Capital & Investment Corp., in an interview with Philippine News Agency.
Francisco pointed out that return on investments of above 10 percent is “too good to be true”.
He cited examples of investments offering good rate of return, including retail treasury bonds (RTBs) or government security bonds, and corporate bonds issued by companies like SM, Ayala, Aboitiz and San Miguel Corp.
“You can get around 5-6 percent on those bonds for a couple of years. It’s not the 18 percent, 12 percent, 20 percent yield on the scams, but at least you get an assured return,” he explained.
Francisco said banks offer preferred shares, common stocks, investment management account, and unit investment trust funds
Ways to avoid investment fraud
To avoid becoming victims of scams, Francisco advised prospective investors to look at bank investments or those offered by banks or securities houses.
He said the financial instrument should be registered with the Bangko Sentral ng Pilipinas (BSP) or the Securities and Exchange Commission (SEC).
“Then, ideally you can check if there is a credit rating… Corporate bonds have credit rating. If there is a credit rating, that’s also better,” he added, noting those with double or triple-A ratings are considered better investments.
Francisco attributed the proliferation of investment scams to “generally low” financial literacy in the country.
“The key in literacy is that: the higher the interest rate that you get, the higher the risk,” he said.
Francisco said the SEC plays a leading role in educating the public about investments and avoidance of investment frauds.
He also underscored the importance of educating students even in elementary and high schools the basics of investing.
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