Fixed Term Fixed Income Taxes
Given the question of who gives the best interest rate for the deposit, the financial advisor can answer in two ways. The most profitable 13-month deposit is from the bank, which a saver can see by reading the ranking give an answer that would give a professional financial advisor who is no other to ask questions. What term do you need the money for? How long have you been renovating that deposit? What purpose do you save for deposits? Do you know any other type of financial products?
The most profitable option is to diversify the savings, and invest them in the right products depending on when you will need the money and if you have any specific objective to save. This is what the Bank of Spain and the CNMV tells us in its web of financial information finance for all Diversification is the best way to reduce investment risk.
Monetize the money
It is necessary that a part of the money, we maintain it as a security mattress that can be in remunerated accounts that do not have maintenance commission, or in monetary funds without risk. It is a capital that we must have liquid for our day to day and for cases of emergency. Thus, in case of need we will not have to undo our investments in the medium and long term. The profitability of this money in the short term can be placed at the maximum environment to 1.5%
It should be noted that money funds investing less than a year those sold as the safest, were a good alternative to deposits to obtain some profitability. Now they are already in negative, because of the types of Negative interest of the treasury bills. They only serve to keep money out of the checking account and as a place of refuge to leave our security mattress. Since you can withdraw the money immediately and with the tax.
These are some of the questions that are being asked by the savers in view of the fall in profitability that the deposits currently have. As reference in the auctions of the Treasury of this 2016, the State continues being financed at negative rates that is to say that the investors pay to invest. 2016 rates at 6 months were (minus) 0.28%% and the letters at one year the rate was (minus) -0.20%.
The 3-year yield remains negative reaching, as low as 0.072% and at the last auction in November 2016 was -0.008%. In terms, it is practically nil but this year is the first time you have to pay to invest for 3 years. Thus, we have seen how in two years they have not stopped reducing interest rates on deposits since January 2013 where the yield of deposits was at 4%, until now at the end of 2016 where deposits have almost advantages of not paying taxes until we recover the money. You can see more about the effect of this tax saving in the article Saving on deposits or investment funds?
Part of the money saved that we renew year by year in deposits we should allocate to invest it in the medium term. If we are accustomed to periodically charging interest on deposits, it can be done in investment funds that pay dividends on a quarterly basis. For example, there are investment funds on the market that every three months pay 1%, which is equivalent to 4% per year. This type of fund invests in many companies that distribute profits and therefore pay that quarterly dividend. Naturally, the companies are listed on the stock market, so in the day to day the stock price of the fund also fluctuates.
In case of investing in mutual funds, we must be very clear that we can have negative returns at some point. If we respect the investment deadlines we must see them as periods of opportunity to obtain better returns in the medium term if we decide to invest at those moments. We must also remember some of the principles that every saver must know is that the valuation of fixed income fluctuates fixed income is valued daily so fixed income is not fixed and has volatility that is as it are quoted Daily,up or down price.
During 2016 due to the possible increase of interest rate in the US. later in Europe we have already seen that fixed income funds with near 0 or negative returns. Especially those that invest in fixed income that overcomes more than 18 Months. So you have to see what kind of fund is involved. Another part of the money that we have so far in deposits if not needed in the medium term can be spent in a longer term investing in mixed funds (fixed income and equity) or to reduce risks.
In funds that invest in Diversifying in many companies countries and economic sectors. In this case although it is a liquid product the ideal is to invest thinking about a time horizon of about 7 years. Depending on the situation of each investor, more or less percentage may be allocated to this period and, for greater security flexible. Highly diversified investment funds must be selected