Experiences investing in double-your-money programs in the Philippines

James Ryan Jonas

One hot topic in the PMT Forum these days is the discussion of double-your-money programs or 20%-per-annum time deposits offered by a few rural banks in the Philippines. In the article  Double-your-money investment schemes — are they for real? we mentioned that these "investments" are actually time deposits and, as such, are covered by the Philippine Deposit Insurance Corporation (PDIC) up to P250,000 (US$5,300).

The discussion centers on whether this high-yield investment program is virtually risk-free due to the PDIC coverage. Consequently, some members have endorsed this double-your-money time deposit program while several others have raised issues against it.

After the jump you can read experiences posted by some PMT members who directly placed money into these offers.

Post your own experiences or join the discussion in the Rural banks offering 20% per annum thread.

Bitster says: 

I initially placed a Deposit of just Php100K, wanting to prove to myself that it did indeed pay 20/12% interest month-on-month. I am happy to report this has been happening for over 2 years now.

I increased my 'investment' in such Time Deposits, with another Php150K 5 Year Time Deposit. I was now at the limit of the PDIC Insurance. Rural Banks DO get closed, so sticking to this limit so ones Deposits are fully covered by this 'insurance' is strongly advised.

EulemOFW says: 

Hi Guys i had a share of investment to this Legacy back in davao and yes PDIC coverage was mentioned when i made my 6-digit investment double-in-3-years.

They did split the amount by 250k each to 4 accounts but reading the explanation by PDIC that all accounts in single name will be consolidated and only be covered max 250K means my 750K is not insured! This sucks! as it was not explained to me in that way.

I hope RBGenSan will not close till i come home mid this year so i can terminate it or have the 3 accounts change to other names in my family. Agents must! and i say MUST disclose all important issues to thier investors coz if not, its the same as they are misleading thier clients with respect to the risks.

richpulubi says:

I personally am investing quite a sum in these banks, and I have asked a few of my lawyer friends about their cases involving bank closures. According to them, PDIC has so far been dependable, as far as reimbursing money within coverage. Therefore, when you really think about it, the risk will be in receiving the second to the fifth batch of PDC's (post-dated checks), after the first year. Of course, you can physically go to the banks and get them yourself.

So, when you really think about it, even if, God forbid, the bank closes after a year, you still make 20%, then your principal will be returned by PDIC.

Investadorado says: 

I first heard of the "double your money in five years" schemes towards the end of last year.  A little voice from my college days reminded me of the saying that if something seems too good to be true it probably is.  

The first question was of course how can the rural bank afford to pay interest of 20% p.a.?  One answer seems to be that they can lend it on under microfinance programs at 3%-5% per month. So providing their microfinance operations are well managed and they stick to zero tolerance of delinquency (and many MFIs do in fact maintain a P.A.R of less than 1%) there is a comfortable margin. 

The next question was why don't they borrow investment credit from PCFC or the NLSF at 9%-11% p.a.?  The answers to this were given to me as: a) that they preferred to spread their borrowing; and/or b) that they had already reached their limit of borrowing from other sources.  

The b) rang a few alarm bells but I went ahead anyway and put in 1m split into five accounts of 200K for myself, my wife and three of our children at the beginning of the year. Since then I’ve received a 20K cheque each month.  

So yes, it is a risk but at 20% p.a. plus the PDIC insurance, I think it is a risk worth taking and only hope I don’t regret not putting in more at the end of the six-year term.

Join the discussion in the following related forum threads:

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.