Bank of the Philippine Islands (BPI) has launched a new campaign to promote their "
Equity Funds". On their
website, on the top banner section, there displayed a comparison between a bank savings (Time Deposit) and an Investment (Equity Funds). The display changes from one month to one year period after the money was laid. What you can easily notice is the relatively slow growth of the Time deposit compared to the seemingly fast growth of their
Equity Funds.
In the picture below, after six months, your 10 000 pesos time deposit has only 237.5 pesos increase while the same amount already have 2905.62 pesos growth if invested in their equity funds. (The disclaimer though, said that the figure is based on the historical performance of their fund.)
By clicking the button, "Start Investing Here", you will be redirected to an interactive webpage (The 10K Test) that will ask about your your risk tolerance.
To further their support and encouragement, they offer a free appointment to explain the risk associated with your
investment and how can you manage it.
You might ask, Why is there a risk? Although it will be explained to you during the appointment, I will explain a little about it.
All forms of investment have an associated risk on it, even deposit accounts. Deposit accounts though has a relatively small risk because it is guaranteed by the
Philippine Deposit Insurance Corporation (PDIC). The maximum guaranteed amount has been recently increased to 500000 pesos. It means, that whatever happens to your bank such as bankruptcy, you are secure that at at least 500000 pesos of your deposit will be returned as long as your bank is a member of PDIC.
On the other hand, mutual funds, like this BPI Equity funds is NOT GUARANTEED by PDIC. Therefore, when you invest in mutual funds you agree to take the risk of losing it all in the rare case that it will be doomed.
Remember the rule of investing: The Higher the returns, the higher the risk.
Image via Wikipedia
