Deposit or investment account: where is it more profitable to invest money

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

A life hacker examines the pros and cons of two financial instruments and compares their profitability with an illustrative example.

Contribution

A bank deposit (or bank deposit) is money deposited with a credit institution (bank) in order to receive income in the form of interest at the end of the term of the deposit.

There are many types and conditions of deposits. There are time deposits and demand deposits. In the first case, the deposit is made for a certain period and can be withdrawn completely without loss of interest only after this period. Demand deposits have no shelf life and are returned at the first request of the depositor, but the interest on them is significantly lower.

Investment is an understandable and relatively safe investment.

It's easy to open a deposit. You don't even have to leave home for this: many banks allow you to open deposits through a mobile application or their website. Of course, for this you first need to become a client of this bank.

The main advantage of the deposit as a type of investment of available funds is the insurance coverage of the Deposit Insurance Agency in the amount of 1.4 million rubles. Within this amount, you can confidently place your deposit in any bank that has a license from the Central Bank of the Russian Federation. If the bank bursts, the state will return the money along with interest on the day the license was revoked. By the way, since 2014, more than 300 banks in Russia have been deprived of their licenses, and their depositors have certainly suffered.

The disadvantage of the contribution is that, in comparison with an individual investment account, it provides rather modest opportunities for increasing funds.

Individual investment account

An individual investment account (IIA) is a type of brokerage account or an individual's trust account, opened directly with a broker or with a trustee (for example, in a bank), on which there are two types of tax benefits to choose from and certain restrictions apply.

The concept of "individual investment account" has been legally enshrined since January 1, 2015. IIS can be opened by both individuals - citizens of Russia, and people who are not citizens of the Russian Federation, but who live on its territory for more than six months a year.

The maximum amount that can be initially deposited on the IIS is 400,000 rubles. During the year, the account can be topped up with an amount not exceeding 1 million rubles.

A big advantage of IIS is the ability to receive tax deductions.

It is paid in the amount of 13% of the amount invested for the year, but not more than 52,000 rubles. That is, both from 400,000 rubles and from 1 million rubles, no more than this amount can be returned. This option is suitable for you if you have a permanent job and the employer pays taxes for you. There is another option - choose tax exemption.

The main disadvantage of IIA is that, unlike a deposit, it is not insured by anyone. However, if you open it in a reliable bank (it has been on the market for a long time, is in the top 20 ratings of Russian banks, there is no reorganization in relation to it) and choose the right investment strategy, then you can earn much more. In addition, in order to use tax deductions, an investment account must be opened for at least three years, during which funds cannot be withdrawn.

How much can you earn on deposit and IIS

Let's compare how much you can earn if you make a deposit of 100,000 rubles and open an individual investment account for the same amount.

Deposit yield

The weighted average interest rate on deposits for a period of one to three years in Russia as of September 2017 amounted to 6, 83% per annum. If you calculate income based on this interest rate, then in a year it will amount to 106,830 rubles. By reinvesting this amount, in two years you will receive 114,126.5 rubles, and in three years - 121,921.3 rubles. Net income - 21 921, 3 rubles.

IIS profitability

Strategy 1: investing in government bonds

Having opened an IIA, you can invest in such a reliable instrument as federal loan bonds (OFZ), the issuer of which is the Russian Federation represented by the Ministry of Finance of the Russian Federation. The yield to maturity of OFZ-26205 at the end of November 2017 was about 7.3%. Taking into account the tax deduction of 13%, the return on investment will be 20.3% in the first year. And over three years (the account is opened for a period of at least three years), the average yield will be about 11.6%. As a result, 138,504 rubles can be obtained in three years. Net income - 38 504 rubles.

Strategy 2: investing in corporate bonds

Another reliable and rather profitable strategy is investment in corporate bonds, the yield on which is slightly higher than on OFZ bonds.

For example, it can be bonds of Gazprom Capital and Rosneft. The average yield on the bond portfolio of these companies at the time of writing is 7.97%. If you put 100,000 rubles on the IIS and, according to the results, get a tax deduction for one year, then after three years we will get an average figure of 12.3% per annum. By the end of the third year, the account will already have 141,020 rubles. Net income - 41,020 rubles.

By the way, for certain bond issues of these issuers, coupon income will not be taxed starting from 2018.

Strategy 3: investing in stocks

The biggest income can be generated by investing in stocks. However, this is also the most risky investment tool, because even if the shares of a company have shown growth over the past periods, this does not mean that this trend will continue in the future. Experienced investors advise investing in several types of shares at once, so that the fall in the shares of one company can be offset by the growth in the shares of another company. This is called portfolio diversification.

The most proven investment is blue-chip stocks - securities of the largest, most liquid and reliable corporations. Among Russian companies, these include the shares of Gazprom, Sberbank, Alrosa and others.

If at the beginning of 2016 you invested 100,000 rubles in equal shares in the common shares of the three largest Russian corporations - Gazprom, Sberbank and Lukoil, the average return on shares of which at the end of 2016 amounted to 43, 93%, then only for one a year you would have earned 43 930 rubles. Add a tax deduction of RUB 13,000 to this amount. It turns out that in just a year you would have earned 56 930 rubles … That said, growth over three years is much more difficult to predict.

Outcome

The contribution is suitable for more conservative and cautious people, probably of the older generation. Opening investment accounts is for more risky people. This is not just a fashion trend, but a good opportunity to make money.