The Philippine treasury bond is one of the best and safest forms of investment for a beginning investor (guaranteed return). Bonds offer a much higher returns than a normal bank or time deposits account. To start investing in bonds, you need to consider 4 major factors, these are:
a.) Capital to be invested - most bonds require higher than 30,000 pesos. This will depend on the bonds and type of investment products they are offering. For example, you can invest bonds at 150,000 pesos or more. You need to consult with your bank if they offer bonds investment as one of their investment products. It is also recommended that you have enough money in your bank to be used in financing the bond investment and that the bank is authorized by Philippine Securities and Exchange commission to act as an agent in processing bond investments.
You are required to sign a few papers and after that, the amount of capital to be invested in the bonds will be withdrawn from your bank account. The capital will then go to the government. Do not lose those papers you just signed. Those are the proof that you are the investor and you will present that again if the investment reach its maturity. For example most 150,000 pesos bond investment will last 4 to 5 years.
b.)Coupon rate- this is the actual earning interest of your bonds. The higher the coupon rate, the higher will be the income generated from your bonds. Most coupon rate today (in 2011) can fall somewhere 6% to 7%.
c.) Years - you are not allowed to withdraw your capital once you invested it in bonds until it reaches maturity. So for example if you want to invest some of your capital in bonds for 5 years. You can only witdraw the entire capital at the end of 5 years. Think this twice before starting to invest in bonds.
d.) Tax rate -Based on my experience, I have observed that the bonds have high tax rate at around 20%. When the time comes you will be paid from your bond investment, the income will be deposited to your bank and you can check it once every 6 months. Tax is already deducted before the income will be deposited to your bank.
The calculator below can be used in computing income generated from Philippine treasury bonds. Depending on what banks you are using as an agent of your treasury bonds; this calculator assumes that you are get paid from your bond investment every 6 months.
Although if it's not six months, this calculator can still provide the monthly projected income generated from your investment. Banco de Oro for example paid the bond investor once in every 6 months. This calculator is based on 4-5 years treasury bond. You cannot use this calculator if its not a 4 to 5 years bond.