Friday, January 11, 2013

BPI Maxi Saver Account: The Next Best Thing After SDA

[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:
  1. 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.
  2. 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.
  3. 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.
  4. 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!

11 comments:

  1. Thank you sir for this idea. This would be a great place to put Emergency Funds.

    But I have to point this out - I think you used the wrong interest rate for your sample computations. It should be 0.0225 instead of 0.02375.

    Thanks again for this great idea.

    ReplyDelete
  2. Thank you for the pointing it out! I have updated the computations :)

    ReplyDelete
  3. Hi Sir,

    Ginawan ko po ng simpleng program yung formula niyo, para malaman ko kung mag kano yung magiging pera ko pag di ko siya ginalaw ng isang buong taon. Tama po ba sir yung result ng computation? Baka may na miss po ako. Kakainis yung tax T___T.

    Month: 1 (P25,000.000)
    Earnings: P46.875
    Earnings minus 20% tax: P37.500
    Principal + Earnings: P25,037.500

    Month: 2 (P25,037.500)
    Earnings: P46.945
    Earnings minus 20% tax: P37.556
    Principal + Earnings: P25,075.056

    Month: 3 (P25,075.056)
    Earnings: P47.016
    Earnings minus 20% tax: P37.613
    Principal + Earnings: P25,112.669

    Month: 4 (P25,112.669)
    Earnings: P47.086
    Earnings minus 20% tax: P37.669
    Principal + Earnings: P25,150.338

    Month: 5 (P25,150.338)
    Earnings: P47.157
    Earnings minus 20% tax: P37.726
    Principal + Earnings: P25,188.063

    Month: 6 (P25,188.063)
    Earnings: P47.228
    Earnings minus 20% tax: P37.782
    Principal + Earnings: P25,225.845

    Month: 7 (P25,225.845)
    Earnings: P47.298
    Earnings minus 20% tax: P37.839
    Principal + Earnings: P25,263.684

    Month: 8 (P25,263.684)
    Earnings: P47.369
    Earnings minus 20% tax: P37.896
    Principal + Earnings: P25,301.580

    Month: 9 (P25,301.580)
    Earnings: P47.440
    Earnings minus 20% tax: P37.952
    Principal + Earnings: P25,339.532

    Month: 10 (P25,339.532)
    Earnings: P47.512
    Earnings minus 20% tax: P38.009
    Principal + Earnings: P25,377.541

    Month: 11 (P25,377.541)
    Earnings: P47.583
    Earnings minus 20% tax: P38.066
    Principal + Earnings: P25,415.608

    Month: 12 (P25,415.608)

    Earnings: P47.654
    Earnings minus 20% tax: P38.123
    Principal + Earnings: P25,453.731

    After 12 months: P25,453.731 (Tama po ba?)

    Thank you for the information sir. :)

    ReplyDelete
  4. Wow, ang sipag. Thank you for making a 12-month computation, I'm sure it will be helpful to readers. And yes, seems your computation is correct, at least for month 1 which I double checked. :)

    ReplyDelete
  5. Hello Sir,

    I have 500k. which is better an SDA or BPI Masi Saver. Please enlighten me. Thank you.

    ReplyDelete
  6. Hi Gio,

    As of writing, BSP has already cut down interest rates of SDA twice this year; it's now 2.5% if I'm not mistaken, which excludes tax and bank fees. That's a clear sign that BSP doesn't want any more money, and it may continue to cut the rates down. There's even a rumor that SDA will be phased out soon!

    With the above, I would suggest putting some to BPI Maxi Saver and putting some to BOND / Fixed income fund (UITF or Mutual Funds), both are low risk investments; BPI Maxi Saver being safer since it's PDIC insured (as far as I know). Hope this helps!

    ReplyDelete
  7. very nice write up. i have the maxi saver account and I am thinking of getting a portion of my savings to a time deposit. Do you think that's a good idea?

    ReplyDelete
  8. Hi Manny,

    I currently have an SDA account but my bank has informed me that it will already be phased out this June 2013. You are saying that the next best thing is BPI Maxi Saver. How much is the maximum PDIC for this type of account? Would you suggest putting all my SDA account to BPI Maxi Saver? Thanks!

    ReplyDelete
  9. It seems they again lowered their rates.
    25,000 - 299,999 = .5%
    300,000 - 499,999 = .5%
    500,000 - 999,999 = .625%
    1M up = 1.25%

    https://www.bpidirect.com//page/view/savings-and-checking-rates

    ReplyDelete
  10. Thank you for the blog. Confused lang ako sa "Required Minimum Monthly". Do I have to deposit at least 25,000 pesos every month?

    ReplyDelete