There are many ways to be invested in the stock market, including deposits. Through more aggressive strategies, or with defensive models that aim to preserve the savings. The dynamism of financial markets has led to new products appear that they have to the equities in the crosshairs. Baja completely different operating mechanics, which will even make you doubt their true intentions.
One of the most characteristic formats that have arrived in recent years are structured deposits. And very specifically the deposits that are referenced to the stock market. The structured ones are designs that base their strategy on combine two products. On the one hand, integrated into traditional fixed income, and on the other hand, with one of the products referenced to securities or stock market indices.
A mixture that can significantly improve the remuneration of the deposits that banks have been marketing up to now. Not surprisingly, the interest rate they apply does not exceed 0,5% in most cases. As a consequence of the decision of the European Central Bank (ECB) to lower the price of money. And that has led to a historic 0%. Something unprecedented in the history of the euro zone.
Very unprofitable deposits
This community decision has generated that term deposits are distributed among savers with a clearly insufficient yield, not more than 0,75%. To overcome these deficient levels there will be no choice but to undertake a series of actions. One of them is to extend the terms of permanence of these banking products. Up to 2 or 3 years in which the invested money will have to be paralyzed. With a not very satisfactory reward, since it will only improve margins by a few tenths of a percentage.
Another of the strategies necessarily involves going to the promotions for new customers as a formula to encourage payment to depositors. It will be more satisfactory as it will raise your profitability to about 1%. Although with the disadvantage that they will be very short deposits. With a term that ranges between 1 and 6 months, and without the possibility of renewing them when they expire.
And a third alternative, perhaps the most profitable, is the one that refers to the linking of deposits to equities in general. As a consequence of this unique investment strategy, interest rates can be substantially improved. Until the 2% barrier is far exceeded. But of course, in exchange for gathering a series of characteristics. Not in vain, they will be mandatory to achieve the objectives.
It is achieved through so-called structured deposits. They are being driven with great determination by the banking entities to capture your customers' savings. With many models, including those linked to other financial assets (currencies, raw materials, precious metals, etc.). There are no limits to the extent of their markets, as you can see.
Requirements to achieve the goals
Through these term deposits linked to the stock market, you will improve the performance of your savings. It is made up of a part from fixed income that will give you a minimum interest although guaranteed. Around 0,50%, which you will always receive in your checking account when it expires. And the other part of the investment is the one that will be linked to equities. Through a basket of actions that are those that can increase the final profitability of the product.
To improve profitability it will be absolutely necessary that the basket of stocks exceed minimum targets in the quotation of their prices. This scenario does not always occur, it can even be very difficult to achieve it. But if it is beaten, then you will be in a position to achieve a more important return on the deposit, which can even exceed the 5% levels.
If this is not achieved, do not worry excessively, since you will have your monetary contributions guaranteed, and in its entirety. With a minimum return as a consequence of the part that goes to fixed income. Another of the main characteristics of this unique savings product is that it has a longer retention period than the other models. It can reach 3 years, even more on certain occasions.
How are structured deposits?
One of the main contributions is that it can be referenced to all kinds of financial assets. Although the link to stock exchanges predominates, both nationally and outside our borders. It is very common to find some models that are linked to the most representative stock indices: Ibex-35, Eurostoxx-50, Dax, Dow Jones, Nasdaq Composite or Nikkei, among the best known by small and medium investors.
As you will see, you can hire them based on your investor preferences, or their evolution. Some are specially made for conservative profiles, while others are aimed at the more aggressive investors, which implies a certain risk in their hiring. This diversity in the offer means that you can choose between infinity of structured deposits. Where the great values of the national stock market are almost always present (Endesa, Iberdrola, BBVA, Santander and Telefónica).
You can also lean towards foreign securities that are listed in the most selective international markets. These are generally companies of great business importance, and that they maintain a high capitalization. Not surprisingly, they are the benchmark for all investors, and the ones that you would probably choose if you were to operate directly in the equity markets.
The strategy of these banking products is based on taking a basket of shares as the investment benchmark. So that in this way a greater diversification is generated in the chosen model. What will you be achieving with this formula? Well, very simple, above all to protect the money from savings. And secondarily, expand your framework within equities.
The goals you will achieve
If you choose this savings model, there is no doubt that you will have varied your approaches to taking them away from what are more or less conventional impositions. From this moment on, import a series of contributions that will be very convenient for you to know. They are the following that we expose you below.
- You will never risk your money since it will be guaranteed from the beginning, with a minimum performance that will also be assured. It is not a product, therefore, a generator of certain risks as can be understood at the beginning.
- You can invest the capital you prefer based on your profile as a saver. These time deposits can be subscribed from modest amounts for all households, and up to a maximum that will be imposed by the conditions of each model.
- It is a very special form of investment, since you open positions in equities but without exposing you directly. In this way, you will not have losses under any of the circumstances.
- Are the more defensive savers those most likely to carry out these actions, to try to improve their small profit margins through a basket of equities.
- They have about very long terms of stay in all cases. Where will it be necessary for you to consider whether it is really worth subscribing to this kind of banking products.
- These time deposits are not only linked to traditional equities, that is, in the stock market. Also to other financial markets, ranging from currencies to precious metals. With few exceptions.
- This alternative is based on mixing one part in the classic fixed income and the other remaining in the variable. Where the general computation will be the one that determines the reward of these banking products.
Who are they for?
The recipients of these special impositions are none other than the investors of more conservative profile. They do not want to be exposed to the turmoil of the financial markets and opt for these very safe models. They will only reap a few small benefits from the favorable stock market performance of the securities stored in the selected basket since the time deposit.
This alternative can be formalized from quite modest amounts for all savers. And as a consequence, form a very slight exposure to equity markets. You can contract securities, but also indices, sectors or even geographical areas in this bet for these financial assets. In any case, forget about earning double-digit returns as if they were the stock markets.
The proposals you receive from banks are less than up to a few years. Indeed, but despite everything you still have models that import this unique feature. You will only have to opt for the ones that better adapt to the profile you present as a small saver, and wait for maximum profitability. It is the highest you can reach in this class of banking products.
Disadvantages in hiring
Among the main defects of this saving model, the little benefit you can get from equities, whatever their composition, stands out. With hardly any variations between some formats and others. The incentive in this regard is practically minimal. Not in vain, and although it may seem the opposite, you are not facing a product of equities. But only serves as support to raise your annual performance. Nothing more.
Their remuneration, on the other hand, you will always collect when due, and that will go directly to your checking account. If you are in the belief that the stock market is going to rise in the coming months, it is much more advisable that you opt for other equity products, but they do it directly.