Emergency Fund Placement

I blogged about BPI increasing their minimum SDA requirement to Php 500,000 and my search for other viable investment vehicle where I can put my emergency fund. I'm happy because I was able to place the available funds last week.

Accessibility is one of my main considerations. I should be able to withdraw the funds around 2 days when needs arise. This is the reason why I still keep some in my savings account because money is only one ATM machine away. However, savings account only gives a very minimal interest rate, that's why, I feel the need to put a portion to other investment account that has a higher yield with a manageable risk.

SDA is now out of the question since the requirement is high. I can put it in time deposit, but I know there are other options with better returns. I was actually deciding between the conservative type of mutual fund and UITF. In the end, I chose UITF because it has lower fees than MF.

My first choice is BDO's Fixed Income Fund because from my research, they outperformed other banks' UITF. Besides, I just withdrew my Fixed-Income funds last month and it only took me two days to get the money (actually, it should only be one day, but I submitted my certificate too late). I placed it sometime in January 2012 and I got a yield of around 4% (net) during the time I pulled it out. Not bad for 10 months, right? What I also like about this is that the minimum amount requirement is only Php 10,000 and that the minimum holding period is 30 days (unlike in MF where the minimum holding period is 6 months for fixed income.) I also requested for them to split my certificates into various amounts. In this way, when I need only a portion of the funds, I don't have to withdraw all my investment with them.

Aside from BDO, I also put a portion to BPI's Premium Bond Fund. I like to have some of my funds in BPI because it the most accessible bank to me. The building where I work has a BPI branch inside and the relationship manager is very accommodating (just a tip, it pays to be chummy with bank managers).  Initially, I want to place it in their most conservative UITF which is their Short-Term Fund. Basically, BPI put their Short-term Funds on time deposits, SDA, and other receivables, hence this is the safest but with a lower return (around 2.9% for one year). The minimum required amount is only Php 10,000 (BDO's UITF equivalent is Php 100,000.) 

Anyway, I ended up with their Premium Bond Fund because it is still conservative but with higher return (although a little riskier than their Short Term Fund, but for me, it is still manageable.) BPI's portfolio composition for their Premium Bond Fund  is 54% government (TBills, RTBs), 9% corporate, and 37% deposits (time deposits, SDA). What I really love about BPI is that their UITF has no minimum holding period. Which means, I can withdraw the funds whenever I want without incurring penalty charges for early redemption. Also, like BDO, you can get your money one day after you submit the certificate (as long as you redeem it before 12 noon). One year performance according to BPI's prospectus is 5.34%.

So there. I now feel secure (and responsible!) knowing that I have an emergency fund (although I wish not to use it anytime soon).