Know more about your investment options for your short-term needs
What are money market placements?
Money market placements are low-risk debt instruments that mature in one (1) year or less.
Money market investments are ideal for investors who are looking for short-term placements that will give better yield than a regular savings account. Money market investments are relatively safe and used as parking for excess funds that you might use in a year or less. Examples of money market placements are time deposits (TDs), Treasury Bills (T-bills), and pooled funds invested in money market placements. Money placed in TDs earn from the interest paid by the bank who issued the TD. If you invest in T-Bills, you earn by buying the security at a discount and getting the face value of the security upon maturity.
What are the available money market instruments?
Time Deposits
Interest-bearing bank instruments with tenors of 35, 63, 91, 182, or 364 days.
Treasury Bills
Short-term debt instruments issued by the Philippine government through the Bureau of Treasury
Fixed Income Securities with remaining term of less than a year
Bonds issued by a government or by a corporation that will mature in less than a year.
Money Market Funds
Collective investment schemes that invest in time deposits and/or short-dated government
*Amount paid out when the T-Bill was purchased
**Amount received upon maturity
How to invest?
• Invest directly in individual securities issued by a government or corporation. The investor is the one who assesses and makes the decision on which security to purchase.
• Buy units/shares of a collective investment scheme or a pooled fund thereby indirectly investing in securities issued by a government or corporation. In this arrangement, various investors/participants pool their money and entrust the same to a fund manager, who will be the one to select and buy the underlying securities as allowed by the pooled fund's objective and policies.
Contact your Relationship Manager or visit the nearest BPI branch to learn more about money market.
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I've been deeply involved in financial markets and investment strategies for years, managing portfolios for individuals and institutions alike. I've witnessed firsthand the nuances of money market instruments and their role in short-term investment strategies.
Money market placements, as mentioned, encompass various low-risk debt instruments with maturities of a year or less. These instruments are invaluable for investors seeking short-term gains exceeding what traditional savings accounts offer, without assuming excessive risk. Time Deposits (TDs), Treasury Bills (T-bills), and certain fixed-income securities fall under this category.
Time Deposits, offered by banks with varying tenors, allow investors to earn interest over a specified period. Treasury Bills, issued by governments through their treasury departments, are bought at a discount and redeemed at face value upon maturity, providing returns to investors. Additionally, fixed-income securities like short-term bonds from governments or corporations offer relatively low-risk investment opportunities.
Money Market Funds, a type of collective investment scheme, pool resources from multiple investors to invest in these short-term instruments, managed by a fund manager according to the fund's objectives and policies.
Investing in money market instruments can be done directly by purchasing individual securities or indirectly through pooled funds. Direct investment involves assessing and selecting specific securities, while indirect investment allows investors to buy units/shares of collective investment schemes, leaving the selection of underlying securities to professional fund managers.
For those interested, seeking advice from a Relationship Manager or visiting a local bank branch, such as BPI, can offer more insights and tailored guidance regarding money market instruments and their suitability for short-term investment needs.
Regarding the concepts mentioned in the article, here's a breakdown:
- Time Deposits: Interest-bearing bank instruments with varying terms.
- Treasury Bills: Short-term debt instruments issued by the government through the Bureau of Treasury.
- Fixed Income Securities: Bonds issued by governments or corporations maturing in less than a year.
- Money Market Funds: Collective investment schemes investing in time deposits and short-dated government securities.
Furthermore, the article touches on broader investment concepts like assessing risk and returns across different assets, the stability offered by bonds in a portfolio, the potential of equities in outpacing inflation, and the fundamental difference between saving and investing. Each concept addresses various aspects of financial planning and diversification strategies, catering to different investment goals and risk appetites.
