:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/U3TLC6YJFBBGPL7ORK6Z5HSHS4.jpg "Fixed term: how much do you need to invest to get $100,000 per month 1")
With January inflation still unknown – January data will be out tomorrow with private forecasts reaching 6.4% – price dynamics remain the main unresolved issue for the Argentine economy. But despite the prospect of a slowdown being near nil, in recent months there has been some reduction in monthly data after the 7.4% peak in July last year that made the interest rates closer to market prices. . In this context, the interest rate deposits to determined time They remain at the 75% annual nominal rate they hit last September and their fight with the inflation data is still relatively even.
The annual nominal 75% figure paid by deposits to 30 day CDD for individuals and for less than $10 million implies a direct return of 6.16% in one month. In other words, more than the December inflation data of 5.1% and above the expectations derived from the Market Expectations Survey (REM) prepared by the Central Bank, at least until March (for when the indicator is expected to return to 6.2%). More recent private metrics that put the January figure at 6.4%, such as C&T’s, indicate that the outcome of setting a fixed term would have been lower than prices over the past month.
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Thus, currently the bowl interest on deposits determined time has some chance of being positive in real terms, at least relative to expected inflation, or at least close to it. Expectations could be insufficient and monthly inflation in the near future could be higher than expected. With an advance of free dollar 9% so far this year, the race is also stabilizing in terms of trading.
The race between prices, dollars and tariffs is even more important if you think about it in annual terms. In effective annual terms, the fixed term is now yielding a return of 107.05%. This performance is achieved in 360 days with firm durations of one month, successively, for one year. As long as, of course, with each new deposit, the initial capital and the interest collected are reinvested. That is to say without taking a penny and renewing everything.
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But what does this mean in terms of nominal returns? How much can be achieved in terms of results by putting savings into this type of deposits?
A fixed term of 30 days per $10,000, with the current rate of 75%, yields 10,616.44 pesos once the term expires. That is, the $10,000 in initial principal plus $616.44 in interest. In annual terms, twelve consecutive fixed terms in which principal and interest are reinvested each time, yields $20,499.63 after 360 days (assuming the rate remains stable during these twelve investments).
So if a saver has a goal of earning a certain amount of interest each month, they might know in advance how much they need to deposit to reach that goal. Anyone looking to get $100,000 in 30 days then needs to invest $1,622,222.22, or more than $4,300 at the free exchange rate, in order to get those returns.
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Indeed, the return of 6.16% per month translates into a profit of $6,164.38 for every $100,000 deposited. Which makes $100,000 in monthly interest the result of over $1,600,000 in initial capital.
However, it should be borne in mind that this result in terms of interest is not exactly a “gain” in an economy with such high levels of inflation as that of Argentina. If prices moved 6% in one month, a 6% return on a financial investment over the same period would have gained nothing and lost nothing “in real terms”, as March-adjusted prices are called in the Inflation economics jargon. To obtain a profit in the strict sense of the word, in this case, the financial investment in question should exceed the rate of increase of the general price level during the same period. Below, the result is a loss.
In this sense, whether winning, losing, or tying against inflation, a saver would not make a full profit if he drew interest each month for his living expenses. If you did, if you rolled over the same initial face amount each time and withdrew interest earned every 30 days, you would be spending savings. decapitalize.
This can be a valid strategy to meet certain payments for a limited time or to extend the life of savings that need to be spent. But, although at a slower pace than from a savings account,
The regulations which weigh on the interest rates oblige the entities to offer not less than 75% of annual nominal to the private individuals, for the deposits lower than 10 million dollars. However, there are isolated cases with lower yields.
Some entities pay less than 75% of the annual nominal.
At present, the traditional fixed durations to 30 days for natural persons and for not more than 10 million dollars pay a bowl 75% in nominal annual terms, which becomes 107.05% in effective annual terms.
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