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Rural Banks offering 20%p.a.?


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Someone told me about this offer by some Rural banks, just wondering how real it is, and if anyone one here have any information about this offer that sounds too good. Thanks..

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You will find a discussion on one of them at:

http://www.livingincebuforums.com/inde...?showtopic=5807

 

Many people have tried them and most appear to be satisfied.

However, I would call it high risk, and it is prudent to limit ones investment to the maximum insured by the government.

 

However, as we have seen, even large banks can fail, so perhaps it is no more risk than some of the "big names".

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Most of the expats I know who have been here 15-25 years are of the same opinion. They say that they are well run Ponzi schemes that will topple eventually. That does not make them right, but I would trust their judgment since they have been correct in most every case in the past.

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The High Interest Rural Banks are not quite the same color a horse as some would above describe them. There is little or no "Ponzi Scheme" to a PDIC insured account. Your risk is simply the stability of the Philippine Government. Okay, in that sense, it is a bit of a "Ponzi Scheme". But, given the government continues to exist and honor its commitments, the worst case is the bank fails and you get your initial investment back after a period of time.

 

Other offerings that do not have the PDIC insurance coverage are much more likely to be what the mods here are trying to paint the rural bank programs as. Legacy Group has offered a 48 percent return on 3 year investments. No government coverage. There was a recent V8 Motorcycle Corp offering that could double your money in one year (for a mere 6 million peso investment).

 

I have money in both and right now, I am so much less worried about the investments in the Rural Banks than I am else where. Hind sight would tell me I should have put almost all of it in the "insured" Rural Banks and not been seduced by the lure of higher return. Oh well. With the falling peso, I guess I should cry a bit more, but it is just part of life. You take risks, sometimes your reap rewards, sometimes you get a spanking.

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A_Simple_Man
Most of the expats I know who have been here 15-25 years are of the same opinion. They say that they are well run Ponzi schemes that will topple eventually. That does not make them right, but I would trust their judgment since they have been correct in most every case in the past.

 

And because it happens in the Philippines, people don't trust it . . but "Many critics of the American Social Security system have labeled it a "Ponzi scheme" as it relies on current workers to pay for the benefits of the retired."

http://en.wikipedia.org/wiki/Charles_Ponzi

 

Before I came to the Philippines, I asked my broker in Canada for an opinion. He said I could invest in SUNLIFE funds, (while still in Canada), which invest in the same Philippine rural banks. If it is good enough for them . . well each to their own.

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btw: current worker paying for retired is what we do in Switzerland since about 100 years or so and it is a very succesful system. Its not a Ponzi scheme in any way, unless the day comes when there will be no more current workers of course. Actually I think its better than a pension plans, because it does not accumulate these huge amounts of money wanting to be invested. And my feeling is there is simply more money around looking for "investment" than real values worth investing into, which is why we will keep on seeing "bursting bubbles".

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MattFromGA
unless the day comes when there will be no more current workers of course

 

Thats not the only way for the system to fall apart. In the USA the items that will blow out SS are:

1. Older people living much longer than expected, thus drawing SS for much longer as well.

2. A generate of people having less children then their parents, thus there are less workers proving SS tax per older person receiving it.

3. Inflation and skyrocketing costs for older people, making SS worthless unless they increase the benifits.

 

SS is government thievery and is a strong indication of a socialist system. Why should the government steal my money and give it to someone else? I dont want the SS - and I dont believe the system will be solvent by the time I'm ready for it. As such, I dont want the govermnet stealing my money for it. Unfortunately, when its the government stealing your property you have nobody to turn to for help.

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Most of the expats I know who have been here 15-25 years are of the same opinion. They say that they are well run Ponzi schemes that will topple eventually. That does not make them right, but I would trust their judgment since they have been correct in most every case in the past.

 

Update - I should have been more clear in that they were talking about the Legacy Group if I am not mistaken! Doing business directly with the rural banks seems to be the way to go.

 

Food for thought - Everyone here seems to accept that the Philippine Government is corrupt to the core. So what would give you so much faith in a "Government Insured" banking system? Just a thought!

Edited by Bob Ward
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BobW, given the small faith many have in the government, how can they invest money in anything, including land here? But people do even as they complain about the guarantor of their credibility of their deed. Without government, there is no property but that which you can hold against others by force.

 

The Ponzi scheme or effect (if you want to give the company and its owners the benefit of the doubt) might apply to Legacy, but that is yet to be seen. However all the info I've ever heard about the Rural Banks has shown that investments there were returned by the government (up to the stated limit). If, as many do, one judges by likely performance in the future by past performance, it would be reassuring that you were not being swindled out of your money.

 

I would be hesitant to invest in Legacy at the moment, given the turmoil going on. I would only invest money in the rural banks but only funds I could afford to do without for awhile, in case the I had to wait for the government to reimburse me, should the bank fail. And as others have noted, the US Banks and Wall street seems to have been a much bigger Ponzi game than anything the Philippines has come up with to date.

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Once again, I have no personal opinion on the matter. I was simply passing on what long time expats told me. These guys own businesses and land here so I get the feeling that they know the ropes.

Edited by Bob Ward
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There has been talk about this possibly being a Ponzi scheme.

(For those who dont know, this is one in which the incoming money from new investors is used to pay the interest to existing investors.)

 

It is possible to get a clear idea if any scheme is Ponzo or not, by examining the figures.

 

Assume that 1 (unit) is invested at day one.

Also assume that no-one ever withdraws their capital. (Very unlikely.)

Also, that at no time do those running the scheme ever take anything for themselves or for running costs.

 

Do the maths.

It becomes quite clear why such schemes fail. Very quickly the numbers become unsubstainable.

Add some costs and assume those running it do take something out, and the time to fail will be much less.

 

As some of these rural bank schemes have been running for around 20 years, it is virtually impossible that it could be a Ponzi.

 

IMHO, other reasons to fail are more likely. As we have seen, even the biggest can fall.

 

So, as has been said, keep the investment to what you woulndt miss.

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I have money in rural bank making 20 percent a year.

 

Oriental Bank is one you can do 5 year time deposits at 20 percent a year.

 

But to be safe and PDIC insured you have to keep the investments at 250,000 pesos. But there is talk that the Philippine Government is going to raise the amount to 1 million.

 

If anyone ever tried to take out a loan or understand how micro financing is so popular here.. you can understand how they are able to pay 20 percent a year.

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smokey
There has been talk about this possibly being a Ponzi scheme.

(For those who dont know, this is one in which the incoming money from new investors is used to pay the interest to existing investors.)

 

It is possible to get a clear idea if any scheme is Ponzo or not, by examining the figures.

 

Assume that 1 (unit) is invested at day one.

Also assume that no-one ever withdraws their capital. (Very unlikely.)

Also, that at no time do those running the scheme ever take anything for themselves or for running costs.

 

Do the maths.

It becomes quite clear why such schemes fail. Very quickly the numbers become unsubstainable.

Add some costs and assume those running it do take something out, and the time to fail will be much less.

 

As some of these rural bank schemes have been running for around 20 years, it is virtually impossible that it could be a Ponzi.

 

IMHO, other reasons to fail are more likely. As we have seen, even the biggest can fall.

 

So, as has been said, keep the investment to what you woulndt miss.

 

 

 

 

 

 

i have read lots about the rural banks but have yet to have anyone tell me they received their interest and withdrew their money at the end of the term with no problems... I hear everyone saying they have been getting their interest but has anyone went to the bank to withdraw or close their accts...

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A_Simple_Man
i have read lots about the rural banks but have yet to have anyone tell me they received their interest and withdrew their money at the end of the term with no problems... I hear everyone saying they have been getting their interest but has anyone went to the bank to withdraw or close their accts...

 

It sounds like you are desperately seeking negatives . . if you are getting 20% interest, why would you want to take out the principal? Where are you going to put it to do better?

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