How to Protect Your Financial Investments in the Philippines

Putting our hard-earned money in various financial investments can give us many benefits, such as improving our earnings, growing our wealth and building up our quality of life in the future. Private individuals, small entrepreneurs, micro businesses, big companies, and the government invest in different types of financial instruments for different purposes. Financial investments may include savings deposits, certificate of time deposits, money market instruments, mutual funds, bonds and investments in equity instruments like corporate stock or share of ownership.

Employees who rely on their fixed regular compensation income invest to secure their life after retirement. Business owners and entrepreneurs invest to ensure their business profitability and stability. The government invests funds to promote national and economic development.  Whatever type of investment it is and whoever the investor is, it is important to know and learn how to protect your financial investments in the Philippines.

The government agencies (SEC, BSP and IC) responsible for regulation of securities, investments, financing and banking activities in the Philippines have teamed up to disseminate important information and practical reminders to protect everyone’s financial investments in the country. The following are the seven important tips you should remember to safeguard your financial investments.

1. Know the financial product that you plan to invest in, particularly the terms and conditions in fine print. Do not invest if you do not understand the product or any of its terms and conditions.

The power of investing should be founded on knowledge and understanding. We have invested hard work to earn our money. Hence, we should be careful and we should exert enough effort to determine if a particular investment product is good for us or not.

2. Do not be enticed by the promise of extremely high returns. Understand that the higher the return on investments, the greater the risk.

It is also common that investments offering instant high returns are hiding eventual financial problems in the long-run.

Avoid pyramiding investment schemes, including internet-based, that induce investors to recruit others in exchange for more income.

You should check the background, legitimacy, reputation, reviews and testimonials about any internet-based companies who are offering investment and income opportunities online. Most investment schemes that induce investors to recruit others in exchange for higher income usually don’t have adequate asset or capital and only rely on the money invested to them by their members or investors.

3. Make sure that the actual investment product/instrument, if sold in the Philippines, is registered with the Securities and Exchange Commission (SEC), or has the prior approval of the Insurance Commission in the case of insurance products.

A certificate of Incorporation from the SEC does not automatically mean that its investment products issued by banks should be authorized by the Bangko Sentral ng Pilipinas (BSP).

You can always check the list of accredited investing and financing companies in the SEC, IC or BSP websites. For example, here is a list of registered Mutual Fund Companies in the Philippines as of December 31, 2010.

4. Check the background of the issuing entity and the people behind it. Investment products issued by banks should be authorized by the Bangko Sentral ng Pilipinas (BSP).

You can also report any doubtful entities and verify it at the BSP office near you.

5. Deal only with solicitors, agents and brokers licensed by the SEC, or with employees authorized by banks if the product is bank-issued.

6. Investment products/instruments are not insured by the Philippine Deposit Insurance Corporation.

7. Keep proof of Investments such as official receipts, investment contracts, certificates of participation, and the like, in a secure place.

For additional information, please access the websites of BSP (Bangko Sentral ng Pilipinas), SEC  (Securities and Exchange Commission) and IC (Insurance Commission).

Source: SEC – Practical reminders to protect your financial investments