FINANCIAL PRODUCTS

 Refersto instruments that help you save, invest, get

insurance or get a mortgage. These are issued by
various banks, financial institutions, stock brokerages,
insurance providers, credit card agencies and
government sponsored entities. Before you invest in
any financial product, you should learn about any
potential risks, limitations, costs as well as other
characteristics of the products.
 Don’tput all your eggs in one basket. Diversify your
investments in a wide range of financial products and
ensure safety and growth of your portfolio.
 Types of Financial Products

 Shares: These represent ownership of a company. While

shares are initially issued by corporations to finance their
business needs, they are subsequently bought and sold
by individuals in the share market. They are associated
with high risk and high returns. Returns on shares can be
in the form of dividend payouts by the company or
profits on the sale of shares in the stock market.
 Bonds: These are issued by companies to finance their business
operations and by governments to fund budget expenses like
infrastructure and social programs. Bonds have a fixed interest
rate, making the risk associated with them lower than that with
shares. The principal or face value of bonds is recovered at the
time of maturity.

 Treasury Bills: These are instruments issued by the government for

financing its short term needs. They are issued at a discount to
the face value. The profit earned by the investor is the difference
between the face or maturity value and the price at which the
Treasury Bill was issued.

 Options: Options are rights to buy and sell shares. An option

holder does not actually purchase shares. Instead, he purchases
the rights on the shares.
 Certificateof Deposit: Certificate Of Deposit (or
CDs) is a savings certificate that entitles the
bearer of the same to receive interest. The CD’s
are generally issued by commercial banks and
the tenure ranges from three months to five
years. The returns on CD’s are guaranteed, that
means you are assured of getting your full
invested amount in addition to the interest
amount that the bank will pay you for your
investment.
Annuities: These are contracts between
individual investors and insurance
companies, where investors agree to pay an
allocated amount of premium and at the
end of a pre-determined fixed term, the
insurer will guarantee a series of payments to
the insured party.
 MutualFunds: is a professionally managed investment
fund that pools money from many investors to
purchase securities.
 What are the benefits of investing in a mutual fund?
 Mutual funds are actively managed by a professional
money manager who constantly monitors the stocks and
bonds in the fund's portfolio. Because this is his or her
primary occupation, they can devote considerably
more time to selecting investments than an individual
investor. It provides the peace of mind that comes with
informed investing without the stress of analyzing
financial statements or calculating financial ratios.
 Unit Investment Trust Fund: A UITF is an open-ended pooled trust
fund denominated in pesos or any acceptable currency, which
is operated and administered by a trust entity in accordance
with the established Plan Rules of the Fund and made available
by participation.
 Each UITF is established, administered and maintained in
accordance with a written trust agreement drawn by the
trustee, referred to as the "Plan" or Plan Rules. The Plan Rules
contain minimum elements such as the name and classification
of the fund, the manner by which the fund is to be operated,
Investment powers of the trustee with respect to the fund,
including the character and kind of investments, which may be
purchased, by the fund and other matters necessary or proper
to define clearly the rights of participants in the UITF.
Complex Financial Products
There are certain financial products that are highly complex in
nature. Among these are:
 1. Credit Default Swaps (CDS): Credit default swaps are highly
leveraged contracts that are privately negotiated between two
parties. These swaps insure against losses on securities in case of
a default.
 2. Collateralized Debt Obligations (CDO): These are securities
that are created by collateralizing various similar debt
obligations such as bonds and loans. CDOs can be bought and
sold. The buyer gains the right to a part of the debt pool’s
principal and interest income.
Banking
Types of Products
Savings Account
 Is an interest-bearing deposit account held at a bank or
another financial institution that provides a modest interest
rate.

Debit Cards
 Debit cards are similar to ATM cards. You can use your debit
card with your personal identification number (PIN) to
withdraw cash from your bank account at your bank’s ATMs.
You can also use it to purchase goods and services.
Credit Cards
A credit card is a form of borrowing. It may
be a convenient mode of payment as it
allows you to buy goods and services without
using cash, but it is not intended to be a
long-term credit facility.
Suggested Credit Cards
 Metrobank Classic Visa
 Annual Fee: Php 1,500 (waived for the first year)
Interest: 3.50% per month
 Other Features:
Chip Card
Metrobank Card has an embedded chip that can protect you
from credit card fraud due to cloning – an occurrence when
your personal and account information are copied and
transferred to a fake card.
Rewards
Earn 1 point for every Php 20.00 that you spend using
your Metrobank Credit Card. Use your points and redeem
premium items or air miles from Philippine Airlines, Cathay Pacific
Airlines, or Singapore Airlines.
 EastWest Bank Classic Visa
 Annual Fee: Php 1,500
 Interest: 3.50% per month
 Other
Features:
Cardholders will have a travel insurance coverage of up
to Php 20 million. 1% of the cash advance amount or
Php 500, whichever is higher; and 3.50% finance charge
imposed on the cash advance amount, which shall
accrue from the date of availing until full settlement or
payment.
 RCBC Bankard myDream JCB
 Annual Fee: Php 800 (waived for the first year)
Interest: 2.90% per month
Special Features: Lowest interest rate and annual fee
among RCBC Bankard’s classic cards
 Other Features:
MyDream JCB’s Pay-Easy-Plan is the best in payment
flexibility. Cardholders can charge in various currencies
abroad and pay in pesos when they get back home. Plus,
they have the option to pay the minimum of 1/20 of their
outstanding balance or Php 500, whichever is higher, at a
very low effective revolving interest rate of 2.50% per month.
 BPI Blue MasterCard
 Annual Fee: Php 1,550 (waived for the first year)
Interest: 3.50% per month
Travel Insurance: Up to Php 2 million
 Other Features:
Accepted in over 29 million establishments worldwide,
the BPI Express Credit Blue MasterCard is your start-up
international credit card. It gives you Php 2 million worth
of travel insurance. Plus, it lets you withdraw cash of up
to 30% of your credit limit in over 1 million Maestro or
Cirrus ATMs globally.
 BDO ShopMore Mastercard
 Annual Fee: Php 900 (waived for the first year)
Interest: 3.5% per month
 Other Features:
Get 1 point for every Php200 spend on SM
Partner Retailers and an additional 0.5 points for
your SM Advantage card. You will also get a 5%
rebate on a minimum Php5,000.00 spend during
the SM 3 Day Sale.
 INSURANCE
 Insurancegives some financial protection or
coverage against a range of events which could
cause you or your dependants some loss. If the
event happens, the insurance company or insurer
which sold you the policy will pay you an agreed
amount, or an amount to cover some or all of the
loss.
 TYPES OF INSURANCE
Life Insurance
 A life insurance policy pays out an agreed amount known as the sum
assured under certain circumstances. This will be paid to you if you
are permanently disabled or critically ill, if your policy provides for this,
or paid to your estate if you are no longer around. This money is
intended to help you meet your financial needs and / or those of
your dependants if these events happen.

Why do you need this?

 For financial protection or coverage
 For retirement planning, savings or investments
Health Insurance
 An accident, illness or disability may leave you with some
financial loss. To help you and your family cope with
expenses at these times, there are different health insurance
policies available.

General Insurance
 General insurance gives you some financial coverage
against a range of events or losses which could be suffered,
for example the loss of your belongings, or damage to car or
house. If the event happens, your insurance company will
pay you an agreed amount, or an amount to cover some or
all of the loss.
LOANS
TYPE OF LOANS
PERSONAL LOAN
 This
is offered for any type of immediate financial need. It can
be used for home renovation, travel expenses, or your child’s
education.

HOME LOAN
A home loan or housing loan is given for the purchase of a
residence. It can be used when you’re planning to buy a
vacant lot, house and lot, townhouse unit, a condominium
unit, and even for home construction or renovation and repair.
AUTO LOAN
 Owning your dream car is made easier with auto
loans. You can choose to apply for a car loan
with banks or car dealerships, known as in-house
financing. The difference is that banks require a
20% deposit that you will have to pay upfront, but
it’s coupled with lower monthly amortizations.
 In-house financing on the other hand offer lower
down payments, but with steeper monthly
amortizations, which can be 4 to 5 percent higher
than banks.
BUSINESS LOAN
 Businesses big or small will often need more
money to expand their operations. The loan may
be used for the operational needs of the business,
such as the purchase of manufacturing
equipment, operational costs, or even vehicles for
business use. This funding arrangement has been
established by banks where they provide capital
through secured business loans. The business
owner/s’ properties or other appraised assets are
set as collateral.
GOVERNMENT LOANS
Eligible individuals may apply for the following services:
 Pag-IBIG– Short-term multi-purpose loan, a housing loan,
and a calamity loan. Borrowers may opt to have their
multi-purpose loans renewed after repaying for six (6)
months.
 SSS
– Salary loan, different types of business and housing
loans, as well as a calamity loan. Borrowers who have
paid at least half of their salary loan can reapply for a
bigger loan amount.
 The
Government Service Insurance System (GSIS) –
consolidated loan, policy loan and emergency loan.
INVESTMENTS
 Before you start investing, find out about basic
investing concepts like how return and risk are
related, how to manage risk through
diversification and asset allocation, what
investment horizon means and how dollar cost
averaging differs from market timing. At all times,
you should be clear about your needs, your ability
to withstand risk and losses, and how well you
understand a product before investing
8 questions you need to ask about a
financial product before you buy
1. What are the benefits?
 The benefits can be about the safekeeping of
your money, the convenience of not having to
carry cash, the ability to buy an asset of
substantial value, growing your money, covering
expenses or paying out a lump sum when certain
events occur.
Are the benefits tangible or unattainable?
2. What are all the costs, and how do costs change
over time?
 Is the cost once-off, or, as in the case of most
financial products, monthly or annual? Will the
costs increase with inflation, change with the
interest rate, remain the same, or decrease over
time?
Are there hidden costs? Ask for the costs in
percentage terms, as well as in rand.
Are the benefits I will receive from the product
worth the cost?
3. What is the term (duration)? Is it month-to-month,
one-year, five-year, 20-year, or for life?
 Can you afford the cost in later years?

4. Is it simple to understand?
 There are a lot of details you need to understand
about a financial product, but is it simple to
understand, or is it quite complicated, with many
moving parts?
5. Is it flexible? When can you upgrade or downgrade?
 Can you make changes to the product?
Can you cancel the product at any time?
Are there penalties for early cancellation? What is the
notice period for cancellation?

6. Is it doing social good? More and more people are

asking this question.
 It’s not just about personal benefit, but whether a
certain product also has a social or community benefit.
7. Your service level: What is your turnaround time on a query, a
complaint, a claim?
 One day, three days, a week or a month?
Do you have an online portal I can log in to?
Do you have an app that allows me to interact with you and my
financial product?
Do you have a call centre?
Will I have a dedicated consultant?

8. Tell me the bad stuff: Such as what’s not covered, what’s not paid,
exclusions, do I lose everything if I miss a payment? What if I can’t
keep up with the payments due to changes in my circumstances?
 What if the stock market goes down 30%?