Investing in savings bonds? Yes, without a doubt by PROTESTE INVESTE

 Investing in savings bonds?  Yes, without a doubt by PROTESTE INVESTE

If you are risk averse and have some cash, this article is for you. January is always the month of change, conducive to decisions or at least resolutions. In personal finance, it can also give a new direction to the amount that has been in the checking account.

We indicate the best savings solutions, with guaranteed capital, for investments between one and ten years. With low risk, there are not many options. The offering is divided into term deposits, Treasury notes, Savings bonds, Treasury bonds (as long as you hold them to maturity), and possibly some capitalization insurance or mutual plans.

These are the products that offer a capital guarantee – and not all of them. For example, there are many types of capitalization insurance, but those that can be subscribed have lost some interest as interest rates have fallen. Since they do not have a fixed income for the future, it is not very accurate to compare them with the products we have listed. They only show past earnings and in recent years many insurers have refused to provide us with information about their capitalization insurance. For the time being, it is a category that PROTESTE INVESTE has many reservations about.

Government bonds favored by rising interest rates

With the increase in Euribor, Savings Certificates became the most profitable savings application, with guaranteed capital. They are unbeatable: all deposits – including promotional deposits for new customers and amounts – yield less.

Calculate in our simulator how much the Savings Certificates can yield, depending on the amount you want to invest.

Simulator for storing certificates

It is not surprising that the subscription of these government bonds has increased 18 times in six months (in November they reached almost 1.7 billion euros). In January, the base interest rate for Savings Bonds rose to 3.088% (gross) from 2.842% in December.

Anyone who registers now enjoys a net return of 2.2%. Since it is an application that capitalizes every three months, it will be reimbursed in the following quarter at the rate calculated in the month of renewal, and so on.

The outlook is that the Euribor will rise, which means that the return on Savings Bonds should rise further.

Below we indicate the alternatives for each of the deadlines, simulating how much you can get according to each of the options.

If you do not have a concrete goal, no fixed goal (saving to buy a house, for example) and you just want to save without taking risks, then opt for the longer term.

How much do risk-free savings products yield?

1 year term TAEL (%)
Save certificates 2.2%
Best Deposit (Banco Invest,ActivoBank, Banco BAI) 1.4%
Treasury Bond (OT EUR 5.65% 02/15/2024) 1.3%
Savings Value Treasury Certificates 0.5%
3 year term
Save certificates 2.5%
Treasury Bond (OT EUR 2.875% 07/21/2026) 2.0%
Best deposit (BAI Europa Bank) 1.6%
Savings Value Treasury Certificates 0.5%
Duration of 5 years
Save certificates 2.5%
Treasury Bond (OT EUR 2.125% 17/10/2028) 2.1%
Best deposit (BNI Europe, BAI Bank) 1.8%
Savings Value Treasury Certificates 0.6%
7 year term
Save certificates 2.7%
Treasury Bond (OT EUR 3.875% 02/15/2030) 2.0%
Savings Value Treasury Certificates 0.7%
TAEL: Net effective annual rate

One year: Savings certificates are the best option

If you intend to invest your savings for a short period (12 months), Savings Bonds can give you a net return of 2.2%, assuming the current base rate is maintained until the end of the year, i.e. the Euribor rates will remain at the current level.

The best 12-month deposits yield a net return of 1.4% at three institutions: Banco Invest (Invest Choice Novos Sumantes); ActivoBank (down payment for new AB customers); and Banco BAI (Premium Term Deposit). Although the yield difference between this government bond and the best one-year deposits is considerable, there are deposits with much shorter maturities and exclusively for new customers and new amounts with net interest rates of up to 1.8% (BAI Bank).

If you choose a one-year Treasury Bond (OT EUR 5.65% 15/02/2024), assuming you hold the bond until maturity (February 15, 2024), you will get a net yield of 1. 3 % (for this and later calculations we have taken into account the price of 3 January). However, this option has transaction costs, which can even slightly reduce the yield.

The Poupança Valor Treasury Certificates yield only 0.5% net in the first year. These government bonds have an increasing interest rate and a bonus from the third year based on the growth rate of the Gross Domestic Product (GDP). However, as the product was not reformulated and nothing was gained from the increase in Euribor rates, it lost its competitiveness and interest in Savings Bonds. There has even been an increase in repayments in recent months.

Three years: Savings certificates also in the medium term

If you plan to invest your savings for the medium term, Savings Bonds are also the best option. Let’s see: assuming the January base rate doesn’t change, you’ll end up with a net annual return of 2.5 percent at the end of the three years.

If you choose the Treasury Bond OT EUR 2.875% 21/07/2026, with a term of three and a half years, and hold it until maturity (July 2026), you will receive a net yield of 2 percent. The best three-year deposit (Fixed Rate Deposit at Banco BAI Europe) yields a net return of 1.6%. Finally, the Poupança Valor Treasury Certificates are the least interesting product, as they only guarantee a net return of 0.5% per annum.

Five years: Savings bonds, unchangeable…

With an annual net return of 2.5%, Savings Certificates remain the best option for a period of five years. Once again, PROTESTE INVESTE’s calculations assume that the January base rate remains unchanged. The purpose of these simulations is to give an idea of ​​the performance that each product can deliver.
The second most profitable investment is Treasury Bond OT EUR 2.125% 10/17/2028, with a maturity of five years and nine months. Assuming you hold it to maturity (October 2028), you’ll get a net return of 2.1 percent.

Taking long-term deposits is not recommended in periods like the current one, when interest rates are rising, especially non-callable deposits. For a five-year term, the best return 1.8% net: Fixed Income Deposit for 60 months, from Banco BAI Europe; and GNI Europa Deposit – Non-Mobilisable (the withdrawable version offers 1.7% net).

As for the Poupança Valor Treasury Certificates, these are the least interesting option: they only guarantee 0.6% net per annum.

From the age of seven: Savings bonds, without a doubt

The E-series Savings Certificates currently on sale have a maximum term of ten years. If you apply for seven years, you get a net annual return of 2.7 percent. But if you keep the titles to the end, you get 2.76 percent.

This is a hypothetical yield, as base rates are unlikely to stay the same for ten years. But even if the Euribor rises even more in the coming years, this series has a limit in its formula: the base interest rate, which follows from an average of the Euribor plus 1%, may not exceed 3.5 percent. It is therefore likely that the maximum ceiling will already be reached in the coming months.

Assuming you hold the OT EUR 3.875% 15/02/2030 Treasury Bond until maturity (seven years), you will get a yield of 2 percent. As we said, you will have to deduct the transaction costs on the exchange. Savings certificates, on the other hand, do not incur any costs.

Despite the rising pace, the Poupança Valor Treasury Certificates, which have a maximum term of seven years, only guarantee a net annual return of 0.7 percent. Looking at GDP growth projections, they should not exceed a 0.9% yield.

For maturities longer than five years, the supply of long-term deposits is scarce. Most disappeared during the long period of low interest rates. The only deposit available (Caixa Agrícola) is for eight years, does not allow mobilization and yields only 0.01% gross. Not interested!

In short, regardless of the term, short or long, if you want risk-free investments, with guaranteed capital and high liquidity, i.e. can be redeemed at any time and without penalties, Savings Certificates are without a doubt the best option to maximize your savings. applying.