He traditional fixed term is in one of its worst moments as an investment in recent years. The income it currently offers is noticeably losing out to inflation and the rise in the price of the dollar. Not only that, the profit it offers is so limited that If $100,000 is invested for one monthgenerates a plus that is practically equivalent to the value of just a Premium alfajor.
He decrease in the reference rate with the objective of the Government of to clean up and put in order the balance sheet of the Central Bank, Reducing liabilities in pesos and the cost of the interest that must be paid also directly affected the income of the instrument most used by conservative savers.
Therefore, the traditional fixed term has faced, from the beginning of last March until mid-May, five consecutive decreases in the reference rate. Thus, in just two months, the annual nominal rate (TNA) offered by a retail bank placement for individuals was reduced from 70% to the current average of 31% of TNA, for the period of 30 days, which is the time Minimum required to fit the funds of this tool.
That is, it decreased by 40 percentage points annually in a very short time.
So, currently, In just one month a bank deposit offers an income of 2.55%which is a percentage that represents around half of the current monthly inflation.
Therefore, If you invest $100,000 today in a traditional 30-day fixed term in most banks, you will earn a total of $102,548 after waiting that time. In other words, an extra 2,548 pesos will be generated.
An income that barely enough to buy a Premium alfajoror, if you’re lucky, a 2.25-litre soda.
Traditional fixed-term placements began to decline after the last drop in rates and after the free dollar began to rise.
The decline of the traditional fixed term?
The current low profitability shows the traditional fixed term as a very unattractive investment alternative, because the rate it proposes is too low for the saver. In fact, the decline in the amounts in pesos placed in banks confirms this trend.
Since mid-May, after the new drop in interest rates and the continuous rise in the price of the free dollar, a notable decrease in term bank placements has been observed.
According to the latest data from the Central Bank, between May 14 and June 14, in those Approximately $825 billion in fixed-rate time deposits were lost in 30 days.
“Of this amount, the decrease in capital represents $275,000 million and the interest withdrawn from the banks by savers was about $550,000 million,” he details to iProfesional. Andres Mendezdirector of AMF Economía.
And he adds: “The The outflow of time deposits operated in two ways. On the one hand, the withdrawal of part of the nominal capital invested. And, on the other, the withdrawal of the interest earned. Of this amount, only a minimal portion (around 7%) was directed to UVA fixed terms, as a way to avoid the ‘damages’ of the drop in the interest rate.”
Fixed term loses with inflation and dollar
At the low interest that a traditional fixed term, It should also be added that the other variables of the economy, such as inflation and the price of the dollar, They register variations well above what the rate for a deposit offers.
Today a traditional fixed term pays 2.5% for a 30-day placement, while monthly inflation is almost double and the blue dollar is climbing at an accelerated pace.
“Those savers who placed a fixed-term deposit are losing a part of their capital every month at the same time that financial dollars are strengthening,” Mendez summarizes.
In fact, while a traditional deposit proposes around 2.55% of TNA in a period of 30 days, for example the price of blue dollar climbs more than 11% in June alone. Or, in the same period the Mep rises almost 8%.
Meanwhile, the May inflation was 4.2%. A figure close to what is expected for the consumer price index (CPI) in June.
In short, the performance of the traditional fixed term was too relegated compared to other references in the economy, something that specifically impacts the deposits made and the current decline for this savings instrument.-
