Interest in bank products has been declining for a long time. Building savings goes down with them. If you have it, then you have certainly noticed it. Building savings bank Good Finance reduced the basic interest in building savings for 1% pa since March 15, 2016. It is a decrease of one third. Who else is worth saving in building saving?
The interest and government bonus will not save the yield
Of course, the drop in interest to 1% pa of people demotivates it at all. Good Finance therefore offers an extra 3.5% pa for building savings up to € 3,000. At first glance, it looks fantastic today. However, the interest rate only applies to deposits during the first 12 months following the conclusion of the contract. However, after 12 months, base interest is only 1% pa
The building saving trend in Vienna was optimized for 6 years to 15.3. 2016 only 2.15% pa (source http://www.transparentne.info/sites/default/files/spolocnost/rendita_2016_1.pdf). After March 15, 2016, the return fell significantly below 2% pa, which in combination with the 6-year commitment is really quite low.
In addition to the full state premium in 2016, up to € 1,327.80 is required. The reason for this is the decline in the premium to 5% of the deposit in 2016. How does the premium premium evolve over time, respectively. as it drops, you can see the picture below. And one more point of interest. In building savings in Vienna, the basic interest rate will drop to 0.5% pa after the sixth year.
Like other building societies
All building societies are about the same. Each has some pluses and minuses. However, they combine one thing – they offer a significantly lower appreciation compared to the past, which is the result of declining interest and declining in the premium state.
Čsob stavebná sporiteľňa offers interest of 1.3% pa + interest bonus of 0.5% pa for 6 years. Of course it also has a hook. The entitlement to the payment of the interest bonus will only arise after 6 years from the effective date of the contract and will be paid to you after the cancellation of the building savings. If you cancel the contract in less than 6 years, you lose the claim for interest bonus.
The first building savings bank offers 1% pa (standard extra SE) or 1.75% pa (standard extra SD) for tariffs for savings. Although today’s 1.75% pa seems appealing, there is also a small hook. For this tariff, the minimum target amount is € 20,000, so the minimum closure fee is € 180. This automatically reduces the return on building savings in PSS.
The low appreciation and commitment of 6 years is less attractive for building savings, regardless of the building society. You have to reconcile with it and look for other ways to value your money.
Who is saving the building savings?
Building saving is still popular with people because of its past. For years, it has provided a stable yield for conservative Slovaks.
Every year, a group of people for whom building savings is still beneficial in terms of revenue, commitment and uncertainty about the change in the state premium is getting worse. Many people use building savings simply because they have not noticed a drop in interest and the amount they have to pay to get the premium state.
When is it worth to save yourself in building savings?
- If you require a bank deposit guarantee.
- If you are satisfied with a lower return (return to appropriate selection and setting just above 2% pa for 6 years of savings, taking into account fees, taxes and assuming optimal use of building savings).
- If you can save full premium annually (€ 1,327.80 in 2016)
- If you accept the commitment of funds to 6 years.
When do you pay more for mutual funds?
Conversely, if you require a higher yield, you do not require a bank guarantee, you do not want to have money bound or you want to deposit less than the full deposit for full premium, it may be more appropriate for you to prefer program of regular investment in appropriately selected mutual funds.
For example, I chose some mutual funds where my money is currently invested. I invest in some regularly every month and I invested some in one. If I want to use the money, the portfolio width allows me to withdraw money at any time with profits from those funds that are currently growing.