Short Term Investment

Posted by Fitz Villafuerte under Banking, Income Opportunities, Investing, Personal Finance, Productivity & Mindset on February 12, 2013

If you have P1,000,000 in your savings account that you intend to use as downpayment for a residential lot in the next 6-10 months, what would you do with it? Leave it as it is or Look for Short term investment with higher return than the savings account?

Lets assume that you can still save around P400,000 to P600,000 within that time frame (6-10 months).




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One Response to “Short Term Investment”

  1. Carlos says:

    I’d place it in a 6-month Time Deposit account. (and then place it in a 3-month TD). Afterwards, just a savings account.

    It’ll be safe, I won’t be able to “accidentally” spend it, and if I want to secure it from getting robbed, I could spread it across three banks – 333+ K each; that way even the interest will be covered by PDIC insurance.

    Another option is a money market UITF from a bank I trust and unlikely to go bankrupt any time soon. I normally prefer this over Time deposits, because of the liquidity. But your money is already enough, it has a purpose, and you know when you’ll need it. A Time deposit conveniently answers all those requirements, with the added benefit of being insured.

    A money market UITF rarely (if ever) suffers a loss, but that is still a possibility. And, should anything unfortunate happen, it isn’t insured. And since it’s also invested in TDs and Special Deposit Accounts, it won’t give you a substantially better return. If you have the target amount already, there’s no need to take an unnecessary risk.

    In this case, I think I’ve got my target amount already. So I wouldn’t place it in stocks or bonds either, even though the current bull run makes it very tempting. What if the market enters a correction? Or worse, enters a bear market in 9 months?

    I would however, use my expected savings for investing (assuming I already have an emergency fund).

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