For those new to investing, the retail treasury bonds (RTBs) issued by the government can be considered a safe choice.

This, as RTBs offers a fixed interest rate and is guaranteed by the Philippine government. It is the Bureau of the Treasury (BTr) under the Department of Finance that issues RTBs.

RTBs differ from traditional bonds that are usually offered in larger lots, or from P100,000 to P10 million, making bonds out of the reach of retail or small investors. On the other hand,the RTBs of the BTr are offered in smaller lots or P5,000 each.

From February 13 to 23, 2024, the BTr offered to the public five-year RTBs with the aim of also getting younger Filipinos to invest.

The BTr also conducted roadshows for the latest RTB offering, with the partner-institutions promoting the financial instruments over their physical offices and social media platforms.

The RTBs carried an interest above 6 percent that is paid every quarter.

Those who invested in RTBs placed their funds through http://www.treasury.gov.ph or over the counter through the BTr partner banks that include the Land Bank of the Philippines, Development Bank of the Philippines, China Banking Corporation, BDO Unibank, Bank of the Philippine Islands, First Metro Investment Corporation, Philippine National Bank, SB Capital, and Union Bank.

The proceeds of the funds will be used by the Philippine government for its various programs.

“Proceeds from the RTB 30 issuance will be directed towards much-needed funding support for the Republic’s various programs under the agriculture, infrastructure, education, and healthcare sectors, among others,” the BTr said.

Also, RTBs are part of the national government’s savings mobilization program designed to make government securities available to retail or individual investors.

The latest RTB offer by the BRTr raised a total of P584.86 billion or was 19 times oversubcribed, which demonstrates the growing popularity or RTBs among Filipino investors.

Advantages and disadvantages

Investing in RTBs have advantages and disadvantages. First, the advantages:

1. Fixed yields
2. Low-risk as government guarantees payment of interest and principal
3. No need to monitor (as yields are fixed)
4. Can be sold to another investor through a dealer exchange

The disadvantages of RTBs are:

1. Limited offer period during maiden issue
2. Yields can be lower than stocks of profitable listed firms
3. Higher inflation can negate income gains
4. Subjected to 20-percent income tax

Despite their disadvantages, RTBs, like most fixed-income financial instruments, are becoming attractive to novice investors who are still studying how to invest in the stock market.

Retail or individual investors can also make RTBs part of their portfolio that can include shares listed at the stock market, and mutual funds.

Also, investing in RTBs is a way of helping the government raise funds for its operations, and various programs and projects, as people who invest in RTBs are actually lending their money to the government. This also means that people investing in RTBs are taking part in nation building.