It is a fact that year after year, the yield that can be obtained from a bank deposit is lower and lower. As reported by the Bank of Spain, average interest rates stand at 0,12%which is the lowest figure ever recorded. It is not surprising, therefore, that savings are being directed to other products. We will explain the associated risks and how not to make a mistake.
Investment in bank deposits declines
The fall in deposits means that their holders are redeeming them, either to leave them in an account or to use the money for a purchase, or to reinvest it in other financial products. Putting it in figures:
- Almost 37 billion euros invested in deposits have been rescued.
- There has been an increase of more than 12,000 million euros in investment fund contracting.
The trend seems clear: due to the reduction in guaranteed returns, the average saver is directing his savings to non-guaranteed products, hoping for better returns.
The alternative: investment funds
As we say, unsecured options are gaining ground month by month. But is the risk assumed in mutual funds being taken into account?
This is the big question, and the one who must answer it is each individual who puts his money in risky products. The ethics of our profession require that when marketing an unsecured investment product, we must explain the details of how much risk is being assumed, what can happen in the worst case scenario, etc.
This is very important since Spain is not a country accustomed to investing in funds, at least the bulk of its savings, which is what we are tending to do today.
Tip: assess your aversion and tolerance to risk
It is important to be aware of the options available. Banks have their hands very tied on the profitability they can offer, however, insurance companies are offering better interest rates on products that at the end of the year give a profit share of the profitability achieved by their assets. In addition, we have already seen that for some time now there has been an insurance company that is offering a savings product with a high return, specifically 1.20% net of expenses, on a guaranteed basis.
If your risk profile allows you to invest in funds, do it, but diversify. Do not choose a fund and put “all your eggs in one basket”. Make a “basket of funds” to avoid unpleasant surprises.
If, on the other hand, your profile is more conservative, do not risk more than necessary and settle for a return in line with the risk you are willing to assume, knowing that now there are interesting options, as we have said.
By the way, savings in insurance companies are reaching record figures, precisely for that reason. 234,963 million euros have already been saved in insurance, which is almost 10% more in a single year.
If you want our Savings and Investment Department to help you know your risk profile as an investor and choose the product that best suits it, please contact us. With us you will choose between products, not from a single entity, but from more than 20 insurance companies.
