Philam Life's Money Tree Investment

Some of us are highly prone to the “one day millionaire” mentality, wherein our monthly salary vanishes in the aftermath of a spending spree. While there is nothing wrong with enjoying your hard-earned cash, smart money management stipulates that a good percentage of your income be set aside for savings and investments.

Unfortunately, keeping your funds tied up in a basic savings account hardly maximizes its potential. According to statistics taken from the website of the Banko Sentral ng Pilipinas (BSP), the 2014 weighted average of interest rates for savings accounts is 0.626% and time deposits are 1.033% per annum. The compounding interest is not currently keeping up with the rate of inflation, which according to data from the World Bank, was at an average of 3.0% in 2013, and 4.1% in 2014. The disparity is significant since the savings accounts and time deposit rates are gross. Over an extended period of time, the purchasing power of money stashed away in a bank will significantly decrease.