Of course, having a fixed return of around 3% has become a problem for small and medium investors. Because at this time the fixed and guaranteed returns on savings have practically disappeared from the national financial market. Not like in other times when a 3%, 4% or 5% average yield and in this way to create a stable savings exchange for the medium and long term. In this sense, it can be said that the scenario has changed substantially with respect to other long-forgotten periods.
Now, to improve profitability in financial products, there is no room for more resources than to risk positions, generally through products based on equity markets. While the fixed income has been completely annulled as a consequence of the monetary measures by the European Central Bank. And that have led to the value of money being zero and even with a negative return from any kind of investment strategy. It is no longer possible to create a savings exchange that grows little by little and this weighs down the decisions that small and medium investors will have to make.
Within this general context, we are going to provide you with some tips that can be very useful to achieve a return on savings of around 3% from now on. Of course, it will not be an easy task to carry out, but at least it will be worth putting it into practice in the absence of monetary stimuli that prevent you from carrying out other kinds of strategies in the investment sector. In any case, there is no other solution than to be more innovative in the way of approaching operations from now on.
3% return: funds
One of the alternatives now available to investors to meet these expectations is materialized through guaranteed investment funds. It is a product, although in decline, which still allows us to obtain minimum returns that can be very interesting for our income statement at the end of each year. In this sense, investment funds registered in October 2019 a positive return of 0,12%Therefore, the accumulated profitability up to October reaches 5,7%. Being the guaranteed one of the options that can be taken to achieve this minimum return on investment in money.
It should also be noted that fixed income funds have recorded slightly negative returns in October, with somewhat more intensity in long-term funds (-0,2% for long-term fixed income funds and -0,3% for guaranteed funds, which are the ones that interest us), according to the latest data provided by the Association of Collective Investment Institutions and Pension Funds (Inverco). Where it is shown that collective investment (Funds and Companies) experienced a growth of 735 million euros in October and stood at 490.256 million, which represents an increase of 0,15% compared to September.
High Yield Bonds
It is another of the alternatives that we have to achieve these minimum intermediation margins of which we speak. Although with a latent risk that stands out compared to other financial products. It should be noted that investment in high-yield bonds, better known as high yield, grants a higher coupon, until such time as puncture occurs and it is then where we can lose a good part of the money invested in this model for such a special investment. You can also talk about investing in bonds from emerging countries, but when it comes to investing in bonds of these characteristics you have to be very selective because not all have the same behavior. If not, on the contrary, there are strong divergences between all of them and no matter how high the coupon was.
On this option you have to be very well advised since although the indicated profitability can be covered, it is also true that you can also leave a lot of euros on the way. Because fixed income does not go through the best of its moments and has much more risk than in other periods. In any case, it is one of the few options you have at hand to achieve the 3% return, which is, after all, what is involved in this investment scenario. So that in this way, we can meet our expectations without having to resort to equity markets, both national and outside our borders.
The safe resource of the dividend
The dividends will always remain as the tool that we have left to create a stable savings exchange for the medium and long term. From this perspective we even have the possibilities of having a yield greater than 3% through a fixed and guaranteed payment every year. Almost 80% of the companies listed on the Ibex 35 make a distribution of these characteristics and whatever happens in the financial markets. In addition, it is as a consequence of the profits distributed by these listed companies. From the banking sector to electricity companies, through construction companies.
The average annual dividend of companies that are listed on the equity markets offers a return that goes from 2% to 9%. In other words, through this investment strategy we guarantee ourselves a completely safe money that can solve our liquidity problems in the coming months. To meet the expenses of our family accounting, pay taxes, the children's school or settle a debt before third parties. Generally through two annual installments, in the summer and winter seasons. While on the other hand, it may have a better tax treatment than in other financial products.
Promotional taxes
Another of the more conservative or defensive solutions is materialized through fixed-term bank deposits that come from promotions by credit institutions. This is the only way in which the intermediation margins of these savings products can be improved. To the point of reaching a maximum profitability of around 3% and from any promotional format launched by the banks. In any case, the great drawback of this commercial strategy is that the duration of the deposits is very short. Around 3 or 6 months where the remuneration is higher than in traditional taxes.
While on the other hand, we cannot forget that these offers are not present. If not, on the contrary, they are specific proposals that emerge sporadically every year. And sometimes it is required that its application is not on all the savings, if not on a minimum part of them. To the point of evaluating at the end that they are not a profitable product to be subscribed from now on since at the end of the day the profits may be very weak. With the need to formalize other products that in the end improve the balance of our savings account, which is what it is about in these so common cases.
Individualized savings plan
The last resort is always the hiring of an individualized savings plan that improves our income statement. They are not present in the offer of all financial institutions, but at least we can try from now on. Because it is a very simple way to overcome 2% levels in the intermediation margins. Without the need to meet any requirement from the banks and this is a factor that of course benefits the interests of small and medium savers. Among other reasons because they do not require any period of permanence and are also exempt from commissions and other expenses in their management or maintenance.
In any case of products that must be negotiated directly with the credit institution. And from this point of view, it is the preferred clients who best have it so that their request is accepted. To the point that the interest rate applied to these savings plans can also be negotiated within the ranges previously established in the contracting conditions. So that at the end of the day you can have greater security about its operation in the markets.
Through a very diffuse offer and that in any case cannot be purchased from other banking products, such as in the specific case of fixed-term deposits that are clearer in their acceptance proposal by the clients. From the beginning and without its conditions being changed at any time. With the need to formalize other products that in the end improve the balance of our savings account, which is what it is about in these so common cases.