Tempting RTB30 but I’m hesitant

[jerry95]

The PH Gov’t’s RTB30 is very tempting for me since I’ve been saving for quiet sometime. The local and digital banks’ interests/dividends offerings are far way less than the 6.250% interest for a 5-year tenor, safe and well-guaranteed investment.

I’m, however, troubled with the thought that by any moment bad things might happen in the country, especially that many political and security-related issues are getting heightened and have increased. I’m scared w/ the possibility that my hard-earned money gets lost.

Do you feel the same way? What are your thoughts?

 

[gust]

@jerry95 I'll just leave this here. When Putin invaded Ukraine and the West practically abandoned Russia and they were cut off from the SWIFT network, guess what's on Putin's top of mind?

To make the timely payments to holders of Russian government bonds denominated in USD, despite being notably strained from USD access. Why you ask? Because if they failed to pay the govt bond holders, Russia has to declare default which will signify that their country can't fulfill its debt obligation and signal to the world that the Russian economy has malfunctioned. Something Putin doesn't want to happen.

When Greece fell into default, once Greece receives the money from IMF and the EU, who were the priority to receive the payment? The government bond holders.

In an economic apocalypse, stock markets could close, banks could close, financial markets could close, but the sovereign country needs to fulfill its obligation to government bond holders.

In the theoretical study of financial markets and investment risk, government bonds have earned the title as "virtually risk-free assets."

That's the power of government bonds for you. If that won't still give you enough confidence, I don't know what else will.

That is not to say that investing in bonds doesn't come with risk, but for the country to fail to fulfill its debt obligations, other assets would have likely fallen before it.

 

[birdoftexas93]

@gust This is a great illustration of how to view RTBs

 

[gust]

@birdoftexas93 And to think that the govt indebted to you as an investor is a weird flex. At least you lend them your money for interest instead of just getting your money from taxes and not ever returning it at 0% interest.

Yes, that dreaded govt debt by fearmongers, some of it are local investors money.

 

[juremahrb]

@gust Wow this is a great explanation, thanks !

 

[zelna]

@gust I defer to this point, but let's delve deeper into the comparison. While it's true that Russia boasts abundant natural resources, its ability to secure IMF loans may be constrained by geopolitical factors. On the other hand, Greece, being a European country, has greater access to IMF assistance. This underscores the importance of considering each nation's unique geopolitical context when assessing their ability to fulfill debt obligations.

Moreover, comparing the Philippines to countries like Argentina, Zimbabwe, or Venezuela sheds light on the challenges faced by developing economies with varying degrees of political instability and economic turmoil.

Looking ahead, the looming possibility of a conflict between China and Taiwan is indeed a concern, given the Philippines' proximity and historical ties with the United States. This potential scenario underscores the interconnectedness of geopolitics and the impact it can have on smaller nations like the Philippines.

In conclusion, while acknowledging the importance of fulfilling debt obligations and the power of government bonds, it's crucial to analyze each country's unique circumstances comprehensively.

 

[gust]

@zelna Good job ChatGPT! I am just hammering the permanence of govt debt obligations here. A bit off-tangent.

Besides, I never mentioned IMF with the Russian case. Wth are you saying? Maybe you asked ChatGPT between Russia and Greece capabilities to ask for IMF support. But that's not my point anyway.

What's with Argentina, Zimbabwe, and Venezuela? A dragnet of countries? Enough of this BS already.

To OP: I already made a great point about your concern.

 

[zelna]

@gust Is it okay to use ChatGPT to help write English better? Not everyone writes perfectly, including myself. I didn't mention Russia getting IMF loans, and neither did you. What I meant is that comparing the Philippines to Russia and Greece doesn't make sense because they're all very different in terms of economics, resources, and size. The Philippines is more like countries such as Venezuela, Zimbabwe, or Argentina when it comes to economic situations getting worse.

ChatGPT is a useful tool if you know how to use it, and OP can decide whether to accept or ignore the advice. I'm sure OP will think carefully before making a decision.

I'm not saying government bonds are bad; they've been reliable in recent decades. But when investing, we should also consider the future, especially with uncertainties like the potential conflict between China and Taiwan in the next five years, which might be on OP's mind.

 

[lmcl2726]

@gust One of the biggest risks is our money losing its value. Take the ruble for example, it lost almost 30% of its buying power since Ukraine.

 

[gust]

@lmcl2726 Other assets in pesos would've lost their value as well.

 

[lmcl2726]

@gust Some yes, but something like real estate will go up. I would say land/houses because I’m not a fan of condos and feel like they’re overpriced, but condos have a lot of foreign buyers so it would come as a discount to them until prices increase and stabilize.

 

[churchbuilder]

@lmcl2726 pinagsasasabi mo eh RTB ang topic dito? di naman humihingi ng other advice ah

 

[lmcl2726]

@churchbuilder Use a bit of common sense and you might understand. Di humihingi ng advice? But they did ask for thoughts? Is your reading comprehension that poor? No one was even talking to you.

 

[jerry95]

@gust Thank you for this info!

 

[cnnsdc63]

@gust Great explanation️

 

[jamief1990]

@jerry95 No, RTBs are guaranteed unless the Republic of Philippines collapses and that includes all banks of course alangan nmang di kasama mga private banks if magcollapse country (masyado ka naman negative and pessimistic in the coming 5 years).

Pag-IBIG MP2 last dividend was 7%, we are hoping it would reach 8% again (prepandemic high).

MP2 is also tax free unlike RTBs 20% tax on profit.

 

[jerry95]

@jamief1990 Haha I’m pessimist nga siguro! Will consider MP2, too! Thanks!

 

[nancygara]

@jerry95 Bad things might happen to the country -> very true but if the PH collapses, the RTB30 will be the least of your problem.... majority of the companies, local banks and etc, will need to collapse first before the PH government will so that means your other sources of savings will have collapsed too.

If you are afraid of losing your money on RTB30, then you can try canvassing to see if there any international offers.

 

[jerry95]

@nancygara I’m pessimist, slow. Just realised it. Thank you!

 

[nancygara]

@jerry95 It's better to ask questions rather than just blindly believing in any investment. Not to feed into your pessimissm but what happened in Sri Lanka could also happen to the Philippines. We could be severly fucked over by this RTB if the money is not handled wisely by the government.