One of the savings products par excellence is fixed-term bank deposits. But they have against them at the moment their low profitability. With an interest on savings not more than 1%, although exempt from commissions and other expenses in its management or maintenance. Where one of the strategies to improve your return is based on the formalization of the impositions that are directed to the long term that generate that you have to have the money immobilized for many months, perhaps too many for many savers.
In any of the cases, this class of savings products can be contracted for a maximum term that ranges between 3 and 6 years, in which deposits with increasing interest can be selected, structured or referenced to a stock index, with a capital minimum of between 1.000 and 10.000 euros, superior to that of other depository products at lower terms. In some cases, with the real possibility of canceling them in advance unless they are penalized with commissions that can reach up to 3%.
The most common formula to market this type of financial products is to apply increasing interests, in which as the terms are longer the profitability becomes more attractive, although in percentages not very striking for the real interests of the subscriber, around 3 %. Where no innovative formats as in other classes of shorter term deposits in their permanence. And in all cases it will have to be deducted from the profitability offered by these products for private savings.
Long-term deposits: promotions
In long-term deposits, there are no promotions or welcome offers that focus so much attention on bank users, although on the contrary, low interest rates are not very high. Where, in most cases, the entire deposited capital is guaranteed, which is a security plus for savers in these turbulent times. But anyway, this is not the general trend in this class of banking products. If not, on the contrary, they are very specific strategies put in place by credit institutions to capture customer savings. Offering better conditions in their hiring through a better profitability that is materialized with a few tenths more in remuneration.
While on the other hand, it must be indicated that this product in the promotions cannot be renewed by its holders. In other words, there is no opportunity to continue with these intermediation margins that have been imposed on us by the main credit institutions in charge of marketing it. With an interest rate that usually oscillates between the 1,50% and 2,50%, and without the possibility of canceling them in advance. Where it will be necessary to analyze whether or not its formalization is convenient from now on.
Terms of stay
One of the characteristics of these bank deposits is that their terms are very high and they move in a range that goes from 24 to 56 months. In other words, it takes a long time for us to manage this part of our savings unlike the more traditional or conventional taxes. From this point of view, it should be noted that they are reserved for a very well-defined profile that is represented by the least aggressive savers. Like the fact that it is one of the longest-lived products that we can contract at the moment and in any case very similar in this aspect with investment funds.
Another aspect that we must assess with deposits of these characteristics is the fact that they can be formalized over the Internet. So that in this way, we are in a position to improve profitability by a few tenths of a percentage point and as a complement to this offer for individual savings. To the point that in the end the 1% barrier can be overcome with some sufficiency from minimum amounts from 1.000 euros per contract. While on the other hand, online contracting allows a better comparison between the impositions of these characteristics. With greater comfort from home or another destination and at any time of the day, even at night or on weekends.
Progressive profitability
If long-term deposits are characterized by something, it is because their remuneration is based on the selected terms. As these are longer, the higher the interest rate applied by credit institutions and progressively until reaching the maximum periods of permanence. On some steps that go from 0,1% to 0,5% approximately and that can become filters for choosing these savings products. So that at the end of the day we manage to exceed the initial intermediation margins, which is one of our highest priority objectives.
It should also be noted that long-term deposits are never going to achieve spectacular returns. If not, on the contrary, they are also moving at a very modest level of remuneration as a consequence of the cheaper price of money. It cannot be forgotten that this is currently at 0% and that it is the trigger so that long-term deposits are not as profitable as many of the small and medium-sized savers expect from this class of banking products. In line with that of other models with similar characteristics, as can be seen at the moment through the current banking offer.
Banks offer
Credit institutions have not neglected this offer and has launched a broad proposal on long-term deposits. In this sense, it should be noted that these are less attractive than before and their improvements are less and less attractive. Where they are not present in any of the cases, the links to other financial assets, generally coming from equity markets and especially from stock market elections. On the other hand, in none of the cases, long-term deposits reach the profit margins of other strategies that have been applying these investment models.
Also very relevant is the fact that long-term deposits are not intended to save all the savings accumulated by users. If not, on the contrary, you have to foresee the expenses that will have to be faced in the next few months or years. For the payment of household bills, tax obligations or even the payment of school for the youngest children. In any case, there will be no choice but to analyze what is the budget that we have from now on to reveal the money that we must allocate to long-term deposits.
Likewise, it is also very relevant that these time deposits constitute a way of creating a stable savings exchange for the medium and especially long term. Where users can preserve their savings and obtain a small benefit from these monetary movements. Like its little versatility to adapt to new models in its commercialization and leaving a format that is characterized by being very static from different points of view of the users. There are no surprises for these in their conditions in the subscription and this makes it very predictable for all savers in our country. To reach the conclusion that it may not be worth its formalization due to the equation that it presents between its profitability and the time that the money must be parked until its maturity.
Secured Deposit Accounts
This type of financial product is fundamentally different because it can be subscribed from a minimum monthly amount that is quite affordable for households, around 100 euros approximately. And by which a medium or long-term capital is constituted that allows its holder to accumulate savings for the future plus the interest that it generates. It is therefore a mixture between an account and a deposit in the traditional sense, hence its name, which has a minimum duration of at least five years, although if for any circumstance the owner needs to have the invested capital, he / she may make total or partial redemptions after six months from hiring.
It also has the guarantee that you will always recover, at least, 100% of the amount contributed in the investment made, which adds a plus of security in your operation. It is constituted as one of the clearest alternatives to traditional investment in fixed-term bank deposits, although under substantially different contracting conditions. Being one of the most unknown products by stock users at the moment. With a profitability that, like other financial products, is very unattractive for the interests of individuals. In this sense, it cannot be forgotten that the price of money is currently at 0%, at historical lows.