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Type of Investment: Tresury Bills and Tresury Notes (Government Securities)What these areRiskSource orBasisof ReturnLiquidityOverallAssessmentLoans to thegoverment of the Philippinesor Sovereigndebt. If you buy a treasury bill/note, youhave lentmoney to thePhilippinegovernment.The issuer of atreasury bill/note is thePhilippinegovernment.The risk thatthe nationalGovernmentwill not pay itsloans is low. Atworst, thegovernmentcan print to pay its loans.However, theinterest ratethat thegovernmentwill pay isfixed.The interestthat thenationalgovernmentwill pay youmostly comesfrom the taxesit collects.Because thereis a very lowrisk of non- payment, thereturn of treasury bills isnot very high.Treasury bills/notes areliquid. You can buy treasury bills/notesfrom most banks. You canalso sell these back to the bank fromwhich you bought them.( The "price"that you canget for your treasury billinvestmentdepends onmany factors, primarily theinterest rate atthe time youwant to sellyouinvestment.)A safe, liquidinvestment thatgives goodreturns.TreasuryBills/Notes isthe safest andmost secureinvestment inany land.3 Ways theGovernmentcan Pay YOU1. Get loans to pay theinvestor 2. Increasetaxes3. Print moneyType of Investment: Time DepositsWhat these areRiskSource orBasisof ReturnLiquidityOverallAssessmentLoans to theBank. Theissuer of thetime deposit isthe bank.The risk depends on the bank whichyou opened thetime deposit.The risk thatyou will getyour money back isreduced because thenationalgovernmentthrough thePhillippineDepositInsuranceCorporationSource or Basis of Return: The bank re-lendsthe money toother borrower and collectsinterest fromthem. Theinterest the bank pays youcomes fromthe interest itcharges thoseother  borrowers. Theinterest rate ona time depositLiquidity:Time depositsare liquid.Unless the bank declares bank holiday,you can alwaysterminate your time deposit.(While the bank willallow you to pre-terminateyour deposit,they willreduce theinterest thatthey will payA relativelysafeinvestment, aslong as youchoose the bank carefully.Look for agood track record.Remember thathigh returncomes withhigh risk.Sometimes, the bank may offer higher interestrates thanothers because
 
(PDIC) insuresdeposits up toPhp 250,000.is generally notvery high. It issometimeseven lower than treasury bills if theamount youare investing isnot large.you. Most banks will payonly thesavings depositinterest rate,which is muchsmaller that thetime depositinterest rate.)it is in need of cash.Type of Investment: Equities/Stock InvestmentsWhat these areRiskSource orBasisof ReturnLiquidityOverallAssessmentAn investmentas a partner or owner of afirm. You can buy stocks (1)directly fromthe company,(2) from other owners of thecompany, or (3) from thestock marketor PhilippineStock Exchange.The risk fromstock investmentscomes mostlyfrom the business thatthe company isinto. For example, aninvestment in acompany thatis in oilexploration isriskier than aninvestment in acompany thatis in the fast-food business.The returnfrom a stock investmentcomes alsofrom the business that isinto. The business has tomake moremoney than itneed to pay for its operationsand loans. Themoney that isleft after  paying for operations andloans goes tothe owners inthe form of dividends anda higher pricefor the stocks.If the businessis good, theowner erans. If  business is bad and doesnot makeenough to payfor itsoperations andloans, theowners do notget anything.Stock investmentsare generallynot liquid,unless thecompany islisted in thePhilippineStock Exchange. If you want to getthe money youinvested back,you have tofind someonewho is willingto buy thestock from youand you haveto agree on a price for thestock. Thestock market(PhilippineStock Exchange)makes this process(finding a buyer andsetting a pricefor the stock)easier for thecompanies thatare listed in it.Stock investments aremuch riskier than loans suchas timedeposits andgovernmentsecurities butthey can alsogive thehighiest returnif the businessyou invested inerans well. Besure youunderstand the business of thecompany youare investing inand that its products or services arethose that people willwant to buy.Be sure toothat the other owners whowill run the business aretrustworthyand canmanage the business well.
 
Type of Investment: Unit Investment Trust Fund (UITF)What these areRiskSource orBasisof ReturnLiquidityOverallAssessmentA fundmanaged by atrust companyor the trustdepartment of the bank that isinvested on behalf of thecontributors tothe fund. If you invested ina UITF, youhave pooledyour moneywith other investors andallowed thetrust companyto invest themoney for allof you. Theissuer of theUITF is thetrust company.The UITF can be invested inthegovernmentsecurities,loans and/or inequities. therisk dependson theinvestmentsthe UITF bought. UITF'sare not insured by the PDIC because theseare not bank deposits.The returnfrom a UITFdepends onwhere themoney wasinvested by thetrust company.You earn if theinvestments of the UITF earn;you can alsolose your money if thetrust companymakes badinvestmentdecisions.Most UITF'sare managed by the trustdepartment of the banks. TheBangko Sentralng Pilipinasallows banksto buy and sellUITFinvestmentthrough their  branches. If you want to getyour money back, you sellyour UITFinvestment back to the bank.The risk andreturn of thisinvestmentdepends on theinvestments bought by thefund. Theexpected returnof a UITF ishigher thanthose of timedeposits or treasury bills because therisk is alsohigher. Be surethat thecompany or the bank you aredealing with isreputable.Type of Investment: Mutual Funds (also known as Investment Companies)What these areRiskSource or Basis of ReturnLiquidityOverall AssessmentSimilar to theUITF, mutualfunds makeinvestments on behalf of investors who pool their moneytogether. Themain difference between theUITF and themutual fund isthat the mutualfund is a separateSimilar tothe UITF,mutualfunds can beinvested ingovernmentsecurities,loans,and/otequities.The risk depends ontheinvestmentsThe returnfrom amutual funddepends onwhere themoney wasinvested bythe company.You earn if theinvestmentsof the mutualfund earn;you can alsoMutual fundshares can presently be bought fromtheinvestmentcompanyitself and/or from SEC-registeredagents of the mutualfund. Youcan sellThe risk and returnof this investmentdepends on theinvestments bought by the fund. Theexpected return of amutual fund ishigher than those of a time deposits or treasury bills because the risk isalso higher. Be surethat the investmentmanager of the
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