For some years now, we have become accustomed to the fact that our savings are no longer satisfactorily remunerated in guaranteed products. Where are the returns of 2-3% that were possible 5 years ago?
The truth is that we have been going through a transition in which, in order to achieve “attractive” returns, we have to go to investment funds and savings products in which the investment risk is assumed by the saver, and many people do not like that.
Among our clients, we are lucky because those who have had savings products for years continue to maintain attractive returns. However, for new savers, it is difficult to find attractive products... until now.
Today we talk about Avanza Forecast, Mutualidad de la Abogacía Group's insurance company, which will offer us net returns in excess of 1%, 2% and even 3% on the products it markets.
Avanza Previsión as an insurance company, who is it?
This company has emerged as a continuation of the former Mutualidad de la Ingeniería, under the investment umbrella of the Mutualidad de la Abogacía Group.
To get an idea of the volume of assets and solvency of the latter, here is some data:
- Mutualidad de la Abogacía manages savings in the amount of 8.5 billion.
- Your solvency exceeds 200% (this is almost double that required by the regulator and is higher than many financial institutions and insurers).
Avanza Previsión already has a solvency ratio of 180%, and is set to increase further.
As an insurance company it is growing very fast, and decided to hire Raúl Casado, who was Deputy Director of Market Conduct at the DGS (Dirección General de Seguros), as General Director in 2020.
What products does it offer?
The advantage of this company is that it is bringing all the experience of the Mutualidad de la Abogacía Group to this insurer, offering really attractive products, which until now only lawyers could enjoy. With Avanza Previsión these savings options are now available to anyone who wants them.
Avanza Previsión used to offer only 3 investment options, which it has extended to 5.. We do not mean this in a pejorative sense, but rather that it really helps in terms of simplicity and flexibility when it comes to understanding what is on offer.
Flexible Savings
Its name indicates its main feature, which is that you can withdraw your money the day after you put it in. In other words, it offers you absolute liquidity, without holding your money for X months or years.
This is the product that we are recommending the most and is most in demand by customers precisely because it is similar to a current account in its contribution and redemption possibilities, but with a high return.
Savings Plus 2, 3 and 5
It is designed for the medium term, as its maximum return is achieved by maintaining the investment until maturity. Previously, it was only offered for a period of 5 years, but with the rise in interest rates, they have been extended to shorter-term options with the same or even better returns. We are talking about:
- 2 year: net return of 2.5% p.a.
- 3-year: net return of 3% p.a.
- 5 year: net return of 2.5% p.a.
Depending on each option, there are liquidity windows in one period or another. That is, you can get your money back sooner or later, but with a lower return than you would get if you hold the product until maturity, which is when these percentages are guaranteed.
Our advice is to use the Flexible product if you don't know when you will need the money, and use the Savings Plus when you know that you won't have to get it back in X years because, comparing profitability, it is more interesting.
These 2 savings products can be taken out by both individuals and companies.. Lately, banks have been charging fees for maintaining account balances, so it is better to invest in products that offer a return on your money.
Assured Pension Plan (PPA)
This is a guaranteed pension plan. Very attractive for those who have interesting accumulated balances, and want to consolidate what they have, with very good returns.
And an additional clarification: precisely because of this previous experience in savings products, they have an App from which you can monitor the evolution of your positions, and you can see how your accumulated balance is increasing.
What are the returns?
We come to the most interesting point of all, although what we have seen so far already reflects very, very attractive products.
Here are the returns that these 3 products are offering today (mid-2021):
- Flexible SavingsThe net profitability it is offering stands at 1,30% guaranteed. Yes, well above the 0.5% that we are seeing in some companies and returns that have basically been negative in several banks.
You consolidate this return after the first 6 months of the product's life, and you can make both regular and extraordinary contributions.
- Savings Plus: the interest it is ensuring has been shown above, but just to remind you of it:
- 2 years: 2.5% p.a. (net of charges)
- 3 years: 3% p.a.
- 5 years: 2.5% per annum
If, for whatever reason, you have to redeem the product earlier, you consolidate lower returns. Depending on the option taken out (2, 3 or 5), the percentages vary from one to another, as the investment terms are very different.
The minimum contribution for the product is €5,000.
In the event of a ransom, the company guarantees the money in the account within 48 hours of receiving the request.
Companies can also sign up for these products under similar conditions. This is very interesting because we see that many customers are being charged a commission for maintaining high balances in their accounts. However, with these products they can obtain a very interesting return. In the case of Flexible Savings, the interest consolidation is more progressive.
- Assured Pension PlanThe return is 2.8% with expenses of 0.25% per quarter, leaving a net profitability of 1,8% per annum. Here the contribution limit is the same as for any pension plan.
If you are interested in more information or in taking out any of these products, please contact us. Our Savings and Investment Department will help you maximise your savings.
