I’d like to clarify first that I have no intention to
offend any bank institution out there, it just a simple question asked to me by a friend after explaining the Value Investment advantages in the long run
 compared to bank savings.

She had an account at our local bank for a year now and proud for her earned interest. I searched the website, the offered product mentioned of this bank, and I just found out the rate offered of her bank which is the below the details;

    Initial Deposit                   25,000
   Maintaining Balance          25,000
   Balance to Earn Interest    25,000
   Interest Rate:    
          25K to < 100 K            1.00%
         100 K to < 500 K           2.00%
         500 K to < 1.0 M           2.50%
         1.0 M to < 5.0 M            2.75%
         5.0 M to < 10.0 M          3.00%
         10.0 M and above           3.50%

As I know, she deposited Php150,000.00 and it’s only fall at 2.00% annually? I admit that I’m not good for these computations, so try to see it for yourself if your interest gains are enough to treat your family for a legit restaurant meal or a new home theater perhaps? Since 2.0% of her money deposited can profit only at least Php3,000.00 annually or Php9,000.00 in three years, then that might be moderately enough. But if, she invested it on stock market and leave it for a year? Or just place it on mutual funds? Will it perform better?

Philippines Stock Exchange index tremendously surge since early of this year. From July 2010 to July 2011, price shows almost 25.0% increase. And let’s assumed that you’ve invested your money at Jollibee Food Corporation; one of the public listed companies at PSE. And one of the most famous fast-food chains in Philippines, of course every Filipino family recognizes them. Every day, we could see numerous costumers buying their products especially on weekends; we could now also speculate that the risk of losing your investment is at low level. Showing their strong fundamentals and good marketing strategies, we can have a peaceful feeling and confidence to invest with them. Below is the stock share price performance of JFC on PSE to give us an idea where it leads our money if invested it here.

For three years, price of JFC already reached 128.57% growth, that is Php192,855.00 profit against to her bank savings rate. Or Php64,285.00 annually, 42.85% per year.

As they says, investing on stock market is very risky to play with and truly indeed. Stock shares value would move up and down with respect to our country’s economy or performance, but in long term… it still posed a winning stands against any bank savings.

The good side on choosing with banks; savings, time deposits, money market, etc. is the higher the assurance of stability not to lose your money. Now instead of just comparing the two, since both of them have positive and negative sides in any aspect, I personally advise my friend to diversify her funds. Some to be remain at her bank savings and some must be on fund investment, neither stock market nor mutual fund.

God Bless.