Allen jaztine C.

alejo
12 - OLLS
SOURCES AND USES
OF SHORT TERM AND
LONG TERM FUNDS
Banks and Non - Banks Institutions
EXAMPLE OF BANKS IN THE LOCALITY
• Banco De Oro Universal Bank
• Citibank
• East West Bank
• Rizal Commercial Banking Corporation
• China Banking Corporation

EXAMPLE OF NON - BANKS

• Pawnshop
• Government non - bank financial institutions
• Lending Companies
• Insurance
• Ventures
Loan and Its Requirements
- Financial Arrangement where a borrower receives money from a
lender agrees to repay the principal along with the interest within a
specific period of time.
Personal Loan
- type of loan from banks that may or may not require any form of
collateral as a payment. this is convenient for borrowers.

Secured
-The lender can take possesion of the collateral if you don`t repay the loan as
you have agreed

Unsecured
- the reverse of secured loans. It is more of a risk for the lender since there is
no asset to recover in case of default.
 Eligibility and Requirements
• Must be a Philippine Resident
• Must be at least 21 years of age
• Must have annual income that meets the requirements
• Must have a mobile phone number under the account of borrower
• must have at least 2 valid id`s

Interest rates and Fees

- Depending on the bank you`ll apply. can range from 1% - 3%.
+processing and application fees
 Housing Loan
- Availed either for buying a real estate for dwelling purposes or for house construction /
renovation purposes. can also be used for refinancing or existing house loan. Granted for
Homeowners or Individuals

Eligibility and requirements

• Must be a Filipino citizen. Foreigners are also allowed to apply but they must present
acceptable visa.
• At least 21 years of age and without going over 65 years olds
• Must have minimum monthly salary of Php 50,000.00
• Must have source of income either from employment or business
• For employed applicant, must have a regular working status with at least 2 years of tenure
• For self - employed, must own a business for at least 2 years of sucessful and profitable
operation
 Documents required
• Completed and signed housing application form
• Clear copy of at least 2 valid id`s with photo.
• For employed applicant: photocopy of latest ITR, original copy of certificate of
employment, copy of at least 2 month pay slip
• For self - employed applicant: validated photocopy of DTI or SEC registration, audited
financial statements for the past 2 years, and other proof or sources of income from
self - employment.
• For Foreigners: validated photocopy of Alien Certificate of Registration indicating Visa
Status as Permanent Immigrant, or Alien Employment permit, or Visa ID

Housing Loan Rates, Terms & Changes

- There is no regulated or fixed interest rate. rate of interest will depend on the eligibility,
terms of payment and the amount of loan. Terms of Period depends on what will be
agreed upon by both parties but usually it ranges from 5 years to 25 years or even 30
years. In addition to interest, processing and appraisal fee will be applied regardless of
wether it will be approved or not.
 Auto Loan
- Allows an Individual to buy a vehicle that is more expensive that what could be afforded in
a lump sum, or cash purchases. Consumers can make use of auto loan by purchasing a new
or used vehicle through bank financing and pay it back for a specific period of time, another
way to make use of auto loan is by reimbursing the cost of a brand new car, getting cash
loan by using your existing car as a collateral, and refinance an existing auto loan

Documents Required
• Completely Filled out Application Form
• Photocopy of any Valid ID
• For employed Applicants, submission of original copy of COE or Certificate of Employment,
Photocopy of at least 2 month pay slip, copy of ITR or Income Tax Return for the latest
years forwarded to BIR
• For Self - Employed Applicants, submission of photocopy of latest ITR with BIR stamp,
photocopy of Business Registration, and copy of Audited Financial Statements for at least 2
years.
Alternative Uses of Funds
- Financial Arrangement where a borrower receives money from a
lender agrees to repay the principal along with the interest within a
specific period of time.
INVESTMENTS
Advantages and Disadvantages
Investing is a process of making money grow and have a return. but in every
type of investment, each has its own level of risk and retun. In order to
minimize this risk, a mix of different investment types is being done to spread
risks and get targeted results.

The Advantage of Investing is that the money is working instead of working

hard for the money. Determining a good return on an investment can
maximize the earning potential. While, the disadvantage of investing is that
there is a possibility of losing money on whatever investment opportunities .
Types of Investment
Investing in a Bank
- will accrue a small amount of interest or in certificate of time deposits with higher
interest rates but contains some serious restriction on its withdrawal

• IN SAVINGS ACCOUNT
- Aside from safety, the money saved in a bank earns minimal interest which makes it
not the best option for long term growth. It is less risky and can be easily withdrawn if
needed. Saving Deposits are insured with Philippine Deposit Insurance Corporation for
maximum amount of Php 500,000.00
• TIME DEPOSIT
- Excess Funds can be placed here to earn higher rate of interest. But it has a fixed
term and should not be withdrawn within the fixed period of time to be entitled to a
higher interest rate otherwise, it will revert back to savings interest rate.
Advantages and Disadvantages
One advantage of Investing in a Bank is Security it is safer whether it is in a savings
account, time deposit, or money market account because in case banks will declare
bankruptcy, bank deposits are insured and guaranteed by PDIC for a maximum
amount of P500k.

On the other hand, It also has disadvantages such as Returns because some banks
have no interest for checking and it has painfully lower returns on these financial
services.

While, Liquidity can be either an advantage or disadvantage. Advantage if the

investment is in a savings account and Disadvantage if the investment is in time
deposit and money market accounts, because it has limits in the withdrawal of the
money
Investment in Bonds
- It is sometimes called fixed interest investments. The level of risk in Investing in
bonds depends on the issuer of bonds. Bonds can be sold without waiting for its
maturity but the orice can go up and down due to market volatility.

Advantage
- It is considered the safest way of to make money considering fixed interest rate.

Disadvantage
- It is always in a fixed term. If money is needed in a short run, it will be sold for a
lower amount meaning receiving an amount lower than the original investment
Investment in Shares of Stock
- buying shares of ownership in a public company. When the company earns money,
It will be distributed to each share through dividends.

Advantage
- It is the best way historically to build wealth. Aside from the share of profits in the form
of dividend, there is a possibility of a capital gain when increases in the stock price in the
market.

Disadvantage
- Dividends or share in profit will depend on the board of directors of the company.
Corporations are not obligued to give dividends every year. In case of Liquidity,
owners of stock are not a priority to be given the remaining assets of the company.
Mutual Funds
- A managed fund by a company that pools money from many investors and invests
the money in securities such as stocks, bonds, and short-term debt

Advantage of Managed Funds

Managed Funds have plenty to offer investors. Here are some of the advantages on this
type of investment:
• Diversification
• Easy for novices to get Involved
• Convenience
• Fund Management
• Investment Amount
Disadvantage of Managed Funds
Before committing to investing in managed funds, there is a need to understand the
negative aspects of this kind of investment. Here are some of the disadvantages:
• Fees
• Performance is not guaranteed
• Lack of Control
• Taxation
Real Estate Investment
- The only investment that is the safest among other investments. Prices will definitely
appreciate or increase in value over time.

Advantage and Disadvantages

- The price keeps on increasing and cannot be taken away by anybody. This can also be
passed on to the beneficiaries. However, It is a long term process. Profits will take time
and looking for interested buyers is a challenge.
Ways and Means to Minimize Investment Risks
Investments are typically categorized according to their corresponding
risks and return. As a rule, the higher the return. the higher the risk. But
the ruleis not necessarily true in reverse order that higher risk would
translate into higher potential reward.
• Determination of tolerance to different kind of risk
• Conducting due diligence
• Diversification of Investment portfolio
• Monitoring of Investment
• Taking advantage of government guaranteed investment products.
 MANAGING
PERSONAL FINANCE
 Personal Finance
-- the science of managing money and deals with all financial decisions and
activities of an individual or household. This includes all financing activities
such as the puchases of products and services, getting insurances,
borrowing money by using owned property as mortgage, opening bank
accounts, and buying online and mobile payment services
Planning Ahead
One of the bases of money management philosophies is creating
a financial plan. this will help everyhting to be organized. In
preparing a plan, there is a need to consider the following basic
inputs which are indispensable:
• Review Expenditures Incurred in the Past
• The Significance if Controlling
Expenditures
• Thinking About the Future
Other personal Finance Planning Tips
We must create financial goals for security and freedom both now
and for the future. Listed below are some of the best practices and
tips for personal finance
• Devise a Budget
• Create an Emergency Fund
• Limit Incurring Liability
• Use Credit Cards Wisely
• Monitor Credit Score
• Plan and Save For Retirement
• Family Consideration
• Rewarding Oneself
Personal Finance Strategies
The key in helping to get the personal finances on the right track are the
principles that contribute to success in business and/or career work.
These principles apply just as well in personal money management.
These key principles are:
• Prioritizing - Discern what keeps the money flowing in, make sure
you are focused on these efforts.
• Assesing - Assesing Potential costs and benefits before spending.
• Restraining - Learn to restrain spending on non - wealth - building
assets and taking into consideration the monthly savings or debt
reduction goals is crucial in building the net worth.
 Earn/Spend/Earn/Spend
Earn/Spend/Save
For Dependent Living For Group who believes in
Cycle 3 Saving Money
Cycle 1

Money Management
Cycle

Cycle 2 Cycle 4

Earn/Spend/Borrow/Spend Earn/Save/Spend

For Individuals who have

For those who believe in Savings
intricacy of living their dreams
Sounds Practices in Earning, Saving,
Spending and Investing Money
 Earning Money
- To have money, you must work hard for it by getting a job or having a business. Money is
earned and also called Income - receiving money for doing a paid work.

Payment for jobs can occur in different ways. These type of payment can either be:

• Wages - involves a fixed hourly rate of pay for a standard set number of hours
• Piece work - Payment is based for each item produced or processed, rathen than the
number of hours worked.
• Salary - involves weekly, semi - monthly, monthly or per annum. Workers are often
required to work overtime and paid overtime pay except those in flexible terms which are
mostly not paid.
• Commission - Payment of work is paid a small "Retainer"or "Flat Fee" plus either a
percentage of the amount of the sales generated.
 Saving Money
- Saving is a Voluntary Act and it doesn`t happen by accident, it involves active works
towards it. You must be willing to do it and it requires a lot of determination.

An example of saving tips that can be implemented are as follows:

• Arrange for an Automatic Saving

• Seperate Savings Account
• Create Seperate Bank Accounts
• Save Your Loose Change
• Avoid overdraft and Bounced Check Fees
 Spending
Spending Money can be difficult to stop, but with the right approach and mindset, It is
possible that money to spend can be saved instead.

• Pay in Cash - Debit/credit Card should not be used for daily expenses. Paying in cash is an
excellent way of living within available means
• Tracking of Expenses - you`ll be aware where the money goes every month. knowledge
about this will lead to an improvement of spending habit and savings at the end.
• Avoid Impulse Purchase - Buy only what is needed. don`t buy an item just because it is
on sale but you don`t need it.
• Payment of Credit Card Bills On Time - Non payment of credit card bills on time, will add
more costs through fess or charges which can easily be saved for productive purposes.
 Investing
- Investing Money is not only for those enjoy financial freedom. Starting investing money at
a very young age will end up gettng more money because of compounding rates of return.

There are some ways to start investing money, as follows:

• Speak to someone knowledgeable about money investments

• Familiarity of the Investment Opportunities will lead to a faithful undertaking
• Diversification of Investement - Managing investment portfolio will be given more
security and better results than keeping money in a bank. There are a lot of investment
instruments like mutual funds, share of stocks, bonds, marketable - securities, etc., which
provide higher return. But it is also worth mentioning to consider risk or return trade off
in marketing investment.
Thank You