Financial Blog

With the COVID-19 pandemic disrupting the markets all over the world, you might be asking yourself: “Where can I invest my money with lower risk than the stock market but still provide stable returns?” Then investing in fixed income securities might just be the option for you.

Fixed income securities are low-risk investments that give you a fixed source of passive income over time (in the form of interest payments) with the face amount/principal invested returned to you upon the end of the term. This investment allows you to reap the benefits of having a stable source of passive income with minimal risk. Interest payments are usually paid out on a quarterly or semi-annually basis. This investment allows you to reap the benefits of having a stable source of passive income with minimal risk. Income is usually paid out on a quarterly basis.

There are several options when investing in fixed income securities. You may opt to invest in government securities as these are generally safe and are issued by the Republic of the Philippines. If you are looking for fixed income securities with higher yields than government securities, you can also invest in corporate bonds issued by SEC-registered Philippine corporations.

Overall, fixed income investments are perfect for investors who have a conservative to moderate risk appetite and who would want to receive a stable income from their investments

Types of Fixed Income Securities

Treasury Bills

Treasury Bills (T-bills) are short-term fixed income investments issued by the Bureau of Treasury. This security offers a maturity of less than a year (3 months, 6 months, or 12 months).

• Issuer: Bureau of Treasury Tenor: 3 months, 6 months, 12 months
• Interest Rate: Prevailing Market Rate
• Interest Payment: Discounted Minimum
• Investment: P50,000

Consider T-bills if you are an investor who would want to park their funds first in anticipation of a need within a year.

Treasury Notes

Treasury Notes (T-notes) are medium to long-term investments issued by the Bureau of Treasury. This investment offers a longer maturity than Treasury Bills of 3 to 25 years.

• Issuer: Bureau of Treasury Tenor: 3 to 25 years
• Interest Rate: Prevailing Market Rate
• Interest Payment: Semi-annually
• Minimum Investment: P50,000

Consider T-notes if you are an investor who is seeking higher yields and who would not need the funds in the medium term.

Retail Treasury Bonds

Retail Treasury Bonds (RTBs) are medium to long-term investments issued by the Bureau of Treasury. These investments are more affordable compared to other government securities due to their low minimum investment. Thus, making it very accessible for small investors.

• Issuer: Bureau of Treasury Tenor: 3-10 years
• Interest Rate: Prevailing Market Rate
• Interest Payment: Quarterly
• Minimum Investment: P5,000

Consider RTBs if you are seeking higher than average returns and who will not need funds in 5 years.

Peso Corporate Bonds

A Peso Corporate Bond is a medium to long-term investment issued by SEC-registered Philippine corporations. This investment usually has a higher interest rate than government securities.

• Issuer: SEC-registered corporations
• Tenor: 2-15 years
• Interest Rate: Prevailing Market Rate
• Minimum Investment: Subject to the minimum denomination of the issuer.

Dollar Corporate Bonds

A Dollar Corporate Bond is mainly a bond that may be issued either by the Philippine Government or Foreign corporations using a foreign currency, usually the US Dollar. Issuer: Philippine or Foreign corporations.

• Tenor: 5-25 years
• Interest Rate: Prevailing Market Rate
• Interest Payment: Semi-Annually
• Minimum Investment: Subject to the minimum denomination of the issuer.

Consider Dollar Corporate Bonds if you are seeking higher than average returns for your USD funds. Although the issuer may be stable, also consider the foreign exchange risk if you plan to convert your investments to PHP in the future.

Long Term Certificate on Deposit

On the other hand, a Long Term Negotiable Certificate of Deposit (LTNCD) is a long-term instrument sold by banks. This is perfect for investors who are looking for a safe investment with high returns and want the flexibility of a negotiable instrument. This means that LTNCDs can be sold anytime on the secondary market before the maturity date.

• Issuer: Banks
• Tenor: Minimum of 5 years
• Interest Rate: Prevailing Market Rate
• Interest Payment: Quarterly
• Minimum Investment: P50,000 to P1M (Subject to the minimum denomination of the issuer)

Consider LTNCDs if you are seeking an investment that can provide good returns while at the same time, have the confidence that your principal is protected as this is guaranteed by the PDIC (for up to Php 500,000). Ideal as well for investors who may need the funds before the maturity as this can be sold in the secondary market.

Unit Investment Trust Funds – USD/Peso Bond and Money Market Funds

A Unit Investment Trust Fund (UITF) is an open-ended pooled trust fund denominated in pesos or any acceptable currency, which is operated and administered by a trust entity and made available by participation.

• Issuer: Trustee & Fund Managers for UITFs
• Tenor: Open-ended
• Interest Rate: N/A, gains calculated using changes in the Net Asset Value per Unit (NAVPU)
• Interest Payment: None
• Minimum Investment: Php 10,000 initial participation for Peso denominated funds and USD 1,000 for USD denominated funds.

Consider UITFs if you want your funds managed by seasoned professionals. UITFs generally have lower initial minimum requirements compared to investing directly in specific fixed income securities.

What are the benefits of Fixed Income Securities?

Fixed Source of Income

Regardless of sudden market changes, interest payments are a more stable income stream throughout your investment term.

Low risk

Investing in government securities such as treasury notes, treasury bills, and RTBs protects you from losing your money because it is guaranteed by the Republic of the Philippines.

High returns

Fixed income securities have higher returns than traditional savings and time deposit products.

Diversity

Fixed income securities offer the necessary diversity to your portfolio and act as a counter-balance for higher risk investments.

Affordability

You can start investing with just P5,000 (Retail Treasury Bonds) or P10,000 for a UITF.

How to invest in Fixed Income Securities?

Fixed income securities are commonly offered by banks and mutual fund companies. However, you need to be kept updated with the latest offerings as these types of investments are not offered all the time. Click here to be updated with the latest investment offerings here to stay updated with the latest investment offerings. To make things easier for you, we’ve compiled all fixed income securities on one page so you can compare easily and check which suits you the best. Click the button below.