Thursday, December 1

Deposits When the long run is useless against inflation

Funding savings in a long-term deposit does not guarantee to save the match point with which inflation threatens money. And it is that these long-term deposits, although they offer a profitability above the average, do not manage to beat the rise in prices.

Those that offer superior returns do so above 1 percent, a far cry from the 5.6 percent consumer price index (CPI) in November. This makes the real return (which is the result of the nominal return minus inflation) is negative. Specifically, -4.5 percent.

The term is not a guarantee either because if the most conservative saver were to invest their money for three years, with an annual return of 1.1 percent, they would lose purchasing power, according to the predictions of the European Central Bank (ECB).

The agency expects inflation of 2.5 percent in the eurozone by 2021, 3.2 percent next year and 1.8 percent for 2023 and 2024.

What returns do the best deposits offer?

The investor may wonder what returns we are talking about when we mention long-term deposits, above 12 months.

The most profitable products, as el de Banca Progetto, offer a remuneration of 1.1 percent over three years. The entity of Italian origin is under the supervision of the Deposit Guarantee Fund, which guarantees up to 100,000 euros per client and account.

The Deposit can be contracted through Raisin and for an investment of 50,000 euros the profits obtained would be around 1,650 gross euros (19 percent of returns on movable capital would have to be discounted).

The next most profitable marketed by Hatoing. The bank with the Portuguese token pays 1.05 percent for three-year deposits. With a minimum investment of 10,000 euros, the customer who had deposited 50,000 euros would obtain returns of 1,575 euros before taxes.

Yes to this we add the payment of taxes (which in Spain ranges from 19 percent for returns below 6,000 euros to 23 percent for those that exceed 50,000 euros) the profitability is still lower.

Long-term products below 1 percent

With these two exceptions, it is very difficult to find long-term products that offer returns above 1 percent.

This is because the banking considers valid that the European Central Bank (ECB) will not move interest rates next year, which remain anchored at zero percent, so that the returns that they can offer little can deviate from that level.

In this way, the deposits of J&T Banka of the Czech Republic remain at a remuneration of 0.85 percent over two years, with an entry barrier of 5,000 euros.

Those of the Belgian bank CVK also do not reach 1 percent, with a maximum remuneration of 0.85 percent over three years.

In Spain there are no long-term deposits

Deposits in Spain were banished from the bank offer of the entities, since they offer remunerations close to zero percent.

According to the data of the Banco de España the average profitability is 0.04 percent for two years and 0.01 percent for terms of less than 12 months and the offers that exceed this are limited in both time and amount and come mainly from foreign banking in Spain or online banking.

Thus, among the existing supply, except for combined deposits, the long term has no place. You can only find an 18-month deposit marketed by EBN Banco, with a return of 0.50 percent.

Banco Finantia, of Italian origin but with branches in Spain, does not offer a higher remuneration, specifically 0.40 percent at 18 months when in the past it was characterized by offering extratypes.