Why, BPI, Why?

In an effort to encourage people to invest in their Short Term Fund, BPI increased the minimum amount requirement to open a Special Deposit Account (SDA) to Php 500,000. Previously, one can open an account for only Php 50,000.

To give you a background, SDA is like a time deposit with a higher yield (lately, I got it at around 2.6-2.8% net of all fees).  SDA is a short-term investment which matures around 30-35 days. However, unlike time deposit, you cannot pre-terminate it. This type of account is not guaranteed by the PDIC, but by BSP - which makes it a relatively safe investment. Perfect placement for some of my emergency funds.

For some banks, opening an SDA required a huge sum of money - if my memory serves me right, it's around Php 1M for BDO and Metrobank. That's why I love the fact that BPI offered it at Php 50,000. But now, Php 500,000 might be a concern.

My target for my contingency fund is around six times my monthly expense. Being single and (a little) "kuripot", the amount is not that high. As much as possible, I want my emergency fund to be placed in safe investment vehicle that provides a good return without sacrificing liquidity. Hence, I decided to put it in three various accounts: SDA (rolled-over every month), UITF fixed income fund (which I already used last month due to some family emergency), and savings account (only a small, easily accessible fund.) But now, I have to cancel my SDA and study where to put it since Php 500K is really too high.

A good place to start the research is through the trusty Monitor My Funds. For mutual funds, I tried comparing the performance of First Metro Save and Learn, ALFM Peso Bond, and Philam Bond Fund. Results show that First Metro outperformed the 2 funds (although of course, as disclaimer goes, past performance does not guarantee future results, but heck, this company might be doing something really amazing)

I did the same for UITF Fixed Income, comparing BDO, BPI, and Metrobank. BDO performed really well compared to the two, having a 7% and 25% growth in 1 year and 3 years, respectively. Minimum requirement posted in the banks' website is Php 10K for both BDO and BPI, while Php 50K for Metrobank.

On the other hand, for money market, BDO still outperformed the 2 banks with Metrobank coming in at second. However, BDO's minimum requirement for money market fund is a whopping Php 100K (Php 50K for Metrobank and Php 10K for BPI.)

This simply means that I have a huge decision to make this week. One thing's for sure though: I will not put everything on my savings account.