How can you improve the profitability of deposits?

Time deposits have been established for practically many years as the savings product par excellence, especially aimed at a very well defined customer profile: defensive user, who has significant purchasing power and gives greater relevance to security to the detriment of the risk associated with other banking products for equities (stock market, investment funds, derivatives, etc.).

However, this haven for savers is progressively losing its role as the preferred banking product to hold capital for several years. The decision of the European issuing bank to lower the price of money has led to the yield on deposits being below their historical lows. 

They offer you interest rates that rarely exceed the 0,75% barrier, in contrast to what happened a few years ago. Where it was completely feasible that you will reach up to 5%, and even higher levels in the more aggressive proposals developed by banks. In addition, with a wide offer that covered all types of these products.

As a consequence of this new economic context, deposits have ceased to be of interest to customers, and it is not surprising that they direct their savings towards other more attractive and productive designs, which currently offer greater profitability. It is not risk-free, since in order to expand these margins it is necessary to link them to other financial assets. And not precisely of equities, but from other emerging markets: raw materials, precise metals, etc..

This is confirmed in the 2014 annual report prepared by the Association of Collective Investment Institutions (Inverco), which highlights the change in habits among Spanish savers. Not surprisingly, in this period the weight of deposits in the asset portfolio of Spanish families fell from 42,3% to 39.8%.

While these monetary leaks areand directed to investment funds collective investment instruments and pension funds. As a strategy to improve your personal accounts through the most solvent financial products.

Strategies to increase your returns

In spite of everything, it will not be totally impossible for you to get an imposition under better contracting conditions. It will undoubtedly be more difficult, but the dynamism of the market generates new models, some of them really innovative, that meet your expectations as a saver. Surely it depends on your profile as a client, but in any case it will be an outlet that you have so that your money does not settle for the poor returns offered by more traditional deposits.

They will vary somewhat in their structure, since Currently you will have to risk your positions a little more, but in the end you will achieve your most desired goal. Not through spectacular percentages, but at least so that by the end of the year your checking account is reasonably more buoyant. They will allow you to pay for a little whim, buy the latest TV model, or even schedule a trip with your whole family.

To make your work easier, banks are developing different business strategies so that your savings can be diverted to other models. In some cases, hiring more products with your usual bank, and in others extending the terms of permanence. Any change may imply an improvement of a few tenths of a percentage over conventional deposits. And that in the most aggressive designs the difference can be widened up to one or two points of average increment.

First key: direct debiting the payroll

It is the most effective experience to quickly achieve your goals. The only requirement that banks will impose on you is that you link your regular income to the entity. In return you can contract deposits with a profitability of up to 5%, as is the proposal that Bankinter has been developing for new clients.

However, not everything will be in your best interests, of course not. To get started, these offers are only valid for very short terms of stay, which rarely exceed 6 months. Likewise, the monetary tranches that can benefit from these products do not reach all your savings, but on the contrary, they cover a maximum of 5.000 or 10.000 euros. And in all cases, intended for new customers, and even limited by the duration of the promotion.

Second key: link them to other financial assets

Linking the tank to other products is usually the most effective solution to increase its performance. It can be to assets from the stock market, but also from other financial markets. These products guarantee a minimum profitability (around 0,50%), but if the expectations of revaluation of these assets are met, they can reach 3, 4 or even 5%. But in any case without being guaranteed, it depends on the conditions of the financial markets.

It is a commercial strategy that the main banks are using to retain their main customers. And that require a longer term of permanence, being able to reach 2 or 3 years. With greater problems that you will have to make cancellations, whether partial or total. And that they will require a greater financial effort on your part, as they are made under more demanding minimum amounts, above 10.000 euros in most of the bank proposals.

Third key: extend your terms of stay

It will be the most conservative tactic you have on hand to improve the performance of your savings, albeit slightly. You will have to extend its period up to 2 or 3 years at least. As a reward you will receive an additional interest of a few tenths above the original plans. But the question you should ask yourself is whether this weak increase is worth it for having your money immobilized for so long.

One of the main drawbacks of applying this strategy is that the period in which you have deposited your assets, any type of expenses may arise, even those not foreseen in your budget. And you may have no choice but to resort to this long-term imposition to meet these needs, and therefore, waiving the interest offered by the signed proposal.

Fourth key: offers for new customers

As a last alternative, you will have no choice but to go to one of the many offers that banks have been offering to attract new customers. They are very satisfactory for your interests, since they provide you with returns of up to 2%. You have many models to choose from, from the so-called welcome deposits, to the traditional offers that have always existed, and that both reflect the philosophy of this commercial strategy.

As in the previous fixed income proposals, in this specific case they are very limited, both in their term of permanence and in the maximum amounts allowed for each contract. Only if you are thinking of changing banks will you be able to opt for one of these savings products.

And that it will even offer you other initiatives to make your hiring more suggestive. One of its advantages, on the other hand, is that They are very flexible models that are continually renewing and adapting to the developments generated by the banking sector.

Five tips that will improve your deposits

You are probably not in a position to change your investment strategy and head to the equity markets to improve your position. You will prefer a minimum and guaranteed return, albeit low, to the risks involved in trading on the stock markets. As a consequence of this decision, you will have no choice but to change your way of thinking, and get involved in a much more active management of your savings. It will be the last chance to achieve your goals.

The objective of your actions will be none other, that by the end of the year your account is more healthy as a result of your positioning in this kind of traditional banking products. It is true that market conditions will not help you to achieve this, but also that the dynamism of the market will allow you a small shortcut to achieve your goals.

In any case, forget about the returns from previous years, you will probably not see them again, at least in the short and medium term. Although any decision by the European Central Bank (ECB) to raise the price of money - as will happen in the United States soon - will help profit margins on deposits improve over the next few months. In the meantime, you will have no choice but to import any of the following recommendations.

• Try to analyze the different offers that banks are proposing to youPerhaps some of them fit your profile as a saver, and with higher performance.
• You can choose to link your taxation to a financial asset, and although it will not guarantee you better interest, You will have the opportunity to achieve it if the market conditions reflect it.
• Not only Spanish banks offer you these products, but other international and legally established in our territory, which have a more generous offer in terms of their remuneration.
• You may have been thinking about changing banks for a while, and the appearance of promotional offers for new customers is the perfect excuse to activate this movement in your personal accounts.
• And finally, you may not know that you can open a deposit in other currencies (pound, dollar, Swiss franc, Japanese yen, etc.), although at the cost of assuming many more risks in the operation. Although if the change is more beneficial to you, you will be able to emerge strengthened by the change in the management model.