[Update May 29. 2013] BPI Maxi Saver decreased its rates. Yield is now lower. See this chart:
25,000 - 299,999 = 1.0%
300,000 - 499,999 = 1.125%
500,000 - 999,999 = 1.250%
1M up = 1.375%
Additional 0.5% bonus if no withdrawal within 1 month.
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If you don't know yet,
the minimum amount to open an SDA account in BPI has been raised to 500K. If you're not familiar with BSP's Special Deposit Account (SDA), you may read more
here.
Even though SDA is less profitable than Bonds or SDA, it has an advantage over other investment vehicles:
- It is relatively liquid. SDA may be terminated on a monthly basis if you want to, you just go to your bank and inform them you don't want to enroll your money in SDA.
- Virtually risk-free, or okay, low risk. It is backed up by Bangko Sentral ng Pilipinas. If it defaults, then our country in general is going down.
- Higher interest rate than your savings. A bank savings account has an average of 0.5% (exclusive of tax), SDA has ~2+%, even higher than some time deposit account.
- Compounded. Since it's renewed monthly, your principal + profit is enrolled next so it earns more as months go by.
Alternative to SDA
Now the question is, if you didn't meet 500K worth of savings, where should you put your money?
For this, I find BPI Maxi Saver to be the next best thing, actually in some areas it's even better than SDA.
If you apply through
BPI Direct, BPI Maxi Saver needs a minimum of 25K PhP. It doesn't have lock-up / holding period, you can use it like a normal savings account. You'll have an ATM, you can withdraw anytime and you can also terminate your account anytime should you decide to do so.
Interest Rates:
25,000 - 299,999 = 1.250%
300,000 - 499,999 = 1.375%
500,000 - 999,999 = 1.5%
1,000,000 and up = 1.625%
That alone is already way better than your average savings account. But like all infomercials, it doesn't end there! There's more! If you don't withdraw your money within the month, you'll earn a bonus of 1%. The additional 1% is still on a per annum basis.
Interest is credited to your account on a monthly basis, if my understanding is correct, there's also a power of compounding in this case.
Let's try a sample computation. Disclaimer, this may not be accurate yet.
Initial deposit to BPI Maxi Saver account: P100,000
After 1 month without withdrawal: P100,158.33
Computation: P100,000 x 0.0225 / 12 months = 187.5 minus 20% tax = P150.000
2nd month without withdrawal (if compounded): 100,150.00
Computation: P100,150 x 0.0225 / 12 months = 187.781 minus 20% tax = P150.225
Notice that the profit you earn from interest is greater in latter months. This is the power of compound interest. Here, it may not seem that much. Between 1st and 2nd month, the difference is measly 0.225 centavos but that's because the principal is relatively small.
Let's compare it to a savings account with an interest rate of 0.375% that is credited to your account on a quarterly basis, this is usually how a normal savings account goes:
Initial deposit to a savings account: P100,000
After 1st quarter / 3months:
Computation: P100,000 x 0.00375 / 4 = 93.75 minus 20% tax = P75
That's equivalent to P25 on the first month in a savings account as compared to P150 pesos in a Maxi-Saver account.
There are also other similar accounts offered by other banks such as BDO, but I found BPI to have the best offer as of writing.
I enrolled a Maxi Saver account 3 days ago via BPI Direct but BPI hasn't got back to me yet. I'll update this blog once I learn more about Maxi Saver from personal experience. Happy investing!
