It is surprising how easily insurance companies and banks trumpet returns on savings plans that exceed 1% guaranteed, even 2%. Today we want to explain what questions to ask to avoid falling into the “trap” and save with better criteria.
Current savings products
Today we all know that guaranteed savings will give us a lower return than a few years ago. Where before, bank deposits could give us up to 3%, today the figures do not go above 0.3%…
Insurance companies have launched products that seek to offer a guaranteed return PLUS a variable profit participation.
This variable part will depend on the profitability of the insurer’s investments, which they share with the policyholders. In this way, and in view of the restrictions of the Directorate General of Insurance, they avoid being tied to returns that are too high for the interest rate situation.
PIAS and SIALP are the most common guaranteed savings products today.
Returns on savings plans
When we look at a guaranteed savings product we should ALWAYS ask about the NET profitability. When we see in large 3% return or 1’5% guaranteed interest, we must ask ourselves: “is this the technical interest rate or is it the net?”.
- The technical interest rate is the same as the gross return, i.e. the return from which the expenses attributable to the client have not been deducted.
- On the other hand, the net interest rate is the one that remains “clean”, real, from the client.
The obligation of those of us who advise on savings matters is to speak transparently to the client. That is why we always try, when dealing with this type of product, to speak in terms of returns net of expenses. We believe that a lie “has very short legs”, and it will always be verified if you promise 3% that is not delivered, and what you really get is less.
The best savings plans
Nowadays, the variety of products is infinite, and the best thing is to be able to analyze the market and the different entities to see which product best suits what we need. There are many issues to consider:
- Profitability we are looking for
- Security
- Permanence required by an entity to recover the money (liquidity)
REALE recently had a campaign offering gifts for starting to save with them, in addition to a very interesting profitability; or SANTALUCÍA has a PIAS linked to funds that is giving spectacular results…
We work with more than twenty insurance companies, so we constantly compare savings plans, and we know who is giving the best returns.
Do not hesitate and contact us to inform you about the product that best suits you.
