Deposits, letters, funds or pension plans: where is the profitability?

Deposits, letters, funds or pension plans: where is the profitability?

Take advantage of the money. Squeeze it as much as possible. That is the objective of thousands of Spaniards who these days flock to the purchase of Treasury Bills to achieve the profitability that they still do not see in bank deposits, and that Stock Market products (investment funds, pension plans, etc.) do not offer if it is not at the cost of risking too much. The queues at the doors of the Bank of Spain headquarters to acquire public debt reveals the image of the need to invest that many citizens have. What does each of the products that come before you offer as well? Let's see.

Bank deposits

It is the classic option where to allocate the savings. In the bank account. In fact, this option is so widespread that the deposits as a whole already accumulate more than one trillion (with 'b') euros saved in these products. The money accumulated during the pandemic increased considerably and now its holders do not know where to take it. Because despite the rise in interest rates that the European Central Bank (ECB) has been approving since last summer, the average return on deposits has barely gone from being frozen to the current 0.6%. For every 1,000 euros, six euros of reward. The bank, for now, has no intention of raising this remuneration too much. They claim that they will only do so when the competition moves. And, in any case, they advise other products to get out of the classic savings, such as certain low-risk investment funds.

Bank deposits will be taxed only on profits and not on the capital initially contributed. They will be taxed as capital yield in the Income Statement. For example, if a deposit of 15,000 euros is contracted. With this deposit we recover the 15,000 euros contributed and, in addition, a return of 1,000 euros is obtained. In this case, you would only have to pay the taxes corresponding to the 1,000 euros of income, but not for the 15,000 initially contributed. It should also be taken into account that maintenance fees usually apply.

Public debt

Treasury bills have become the investment star at the beginning of 2023. Their price has accurately reflected the rise in interest rates. In reality, it is a product with which its holder obtains an attractive return, at the same time that it allows the State to finance itself. In addition, the risk is minimal, since being guaranteed by the Treasury, the possibility of Spain bankruptcy is remote. For 1,000 euros invested in this asset, you will get 30 euros one year ahead.

Those who buy Treasury bills must take into account that the generated return, whatever its term, will be taxed at a rate of 19% up to 6,000 euros, the tranche of the tax base between 6,000 euros and 50,000 euros is taxed at 21%. and the tranche that exceeds 50,000 euros is taxed at 23%. In addition, it must be taken into account that their comfort implies assuming a higher cost due to the commissions they charge, which are generally between 0.2% and 0, 3%.

Investment fund

There is a wide variety of funds in which to invest. From the most conservative, where the risk is lower, but also the profitability they offer; even the most aggressive, with which you can win a lot by risking too much. For this reason, its profitability varies greatly depending on the type of fund and the years in which the investment remains in them. It all depends on the profile of each saver, what he wants to achieve with his money and his expectations. Banks now also offer public debt funds. The advantage of this type of product is that the investment can be moved from one fund to another at any time (what is called a transfer), without the need to pay taxes on the profits obtained. The funds also apply commissions such as subscription, redemption, management, deposit, and even the so-called 'success'.

Pension plan

Until a few years ago it was the product called savings for retirement. However, the lower tax advantages that the pension plans now have, together with a profitability that has not yet started, and the commissions, have caused the contributions of the holders to have decreased year after year. From a tax point of view, the contribution made in one year allows the holder's personal income tax tax base to be reduced. Although, when you recover the money at retirement, you have to pay all the tax that has not been paid during the savings period.