During these times when the inflation rate is surging to almost two-digit rate, leaving your money in a savings deposit, or worse, just inside your safety box, is like letting your money lose its value or its purchasing power. If you’re smart enough, you should not let your money sleep, specially, during these crucial times.
Most “brave” people tend to invest their money at hand into sort of businesses or in the stock market. It could give you the highest return but it is, definitely, the most risky and, usually, has the tendency to loss you money during crisis and when the inflation rate is surging up.
If you’re a type of person who has a “play it safe” attitude, you may tend to put your money in a time deposit since it has a higher interest rate than regular bank deposit. This is prudent, but if you need to gain a higher yield from your money, you should try purchasing Treasury bills (T-bills). T-Bills is a short-term government bonds which has a maturities of usually 91 days, 182 days or 52 weeks. It is less risky like time deposit but has a higher interest rate. Another good thing about T-bills is that its rate is, somehow, correlated to the inflation rate. Thus, your hard earned money is, somehow, protected from losing its value or purchasing powers.
How to buy T-bills?
In the Philippines, you could buy T-bills through banks. In my case, I am using my BPITrade account to buy T-bills. The minimum purchase is around Php100,000.00. Minimum purchase requirement of other banks like BDO and PNB is Php500,000.00. As of this date, the prevailing rate for 363 (calendar) days tenure is 6.7% and 6.0% for 335 days tenure. I still don’t have an updated comparison but I`m quite sure this is higher than time deposit rate, thus making it the better option.
T-bills purchases (in BPI) are subject to bank’s commission fee, which is 1/8 of 1% (or 0.125%) of the cash-out while interest income is subject to 20% tax – like other time deposits. I think there are other fees but based on my brokers actual calculation, my investment of Php99,684.22 will become Php 105,000.00 on the maturity date (after 363 days). In T-bills, you can get your interest income in advance or at the maturity date.