Investing Your Money to MESALA

MESALA or the Meralco Employees Savings and Loan Association, Inc. is a savings and loan association for the employees of Meralco and other Lopez Group companies. It offers a low interest loan and a relatively high interest savings deposit and dividend for capital deposits. It is the second largest savings and loan association in the Philippines, next to AFP’ s savings and loan association.

If you deposit your money at MESALA, it will be first accounted for as your savings deposit. Quarterly, a portion of the savings will be transferred to capital. Capital earns a dividend from the income of the association. The amount of dividend is not fixed but most of the time, it is higher than the income from interest of the savings deposit. In June 2006, MESALA declares 8.8% of the capital dividend for the first semester. If on the second semester, they declare the same amount of dividend. Your earnings from capital deposit will be equivalent to 17.6% of it.

Before, it was a good investment to put you money to MESALA since the earnings from savings deposit and capital is higher than the interest from time deposit of any banks in the Philippines. Plus, interest earnings from MESALA is tax free. Banks impose 20% tax for interest earnings.

From 6%, compounded quarterly, the association lowers the interest rate of the savings deposit to 5% in 2005. They also limit the amount that can be transferred to capital to Php 3,000.00 every quarter. Meaning, you can only accumulate a total of Php12,000.00 per year. They also impose a limit of the maximum capital to Php 100,000.00. If you are already satisfied with Php 100,000.00 as your investment, MESALA is good for you, but you have to wait 8 years and 6 months to completely transfer your money to capital deposit.

It is not also advisable to “time deposit” your money on savings account for as long as the inflation rate is higher than the interest rate, simply because it will only lost its value gradually over time. Your deposit must also be higher than Php 24,000.00 because the association deducts a Php 1,200.00 annually to each member for insurance.

- The Author of this article is a MESALA account