Co-founder of Affari Miei Independent Financial Advisory Company
23 September 2023
Today we tackle a hot topic: let’s compare the BBVA deposit account with a 5% yield and the BTP Value of October 2023. Both have their advantages and disadvantages and I am here to guide you through this analysis. Let’s start!
This article talks about:
BBVA Deposit Account 5%
Let’s see briefly what they are advantages they disadvantages of the new offer from the Spanish bank.
High performance: With a 5% gross return for 12 months, BBVA beats the market average;
Flexibility: You can withdraw your funds at any time without penalty;
No cost: There are no opening, management or cancellation costs.
Taxation: prepare your wallet for a 26% withholding tax on interest and a stamp duty of 0.2% per annum;
Maximum Investment: if you have more than €100,000 to invest, BBVA is not the option for you because you can activate a maximum of two constraints of €50,000 each.
BTP Value October 2023
Now let’s see both i instead advantages that disadvantages of the BTP Valore October 2023.
Facilitated taxation: on Italian government bonds it is 12.50%;
Reasonable term with periodic coupons: a five-year investment with quarterly coupons;
Loyalty Award: Extra at the end if you hold the investment until maturity.
Volatility: if interest rates change, the value of your BTP will change and you will not be able to get rid of it quickly. The deposit account, on the other hand, has a fixed value;
Issuer Risk: Even if it is remote, there is always a risk linked to Italy’s financial solidity.
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Performance: BBVA offers you a 5% gross, while the BTP Valore could fluctuate between 3.8% and 4.2% gross (the yield will be communicated on September 29th);
Flexibility: With BBVA, you can withdraw whenever you want, while the BTP Valore commits you for 5 years;
Taxation: The BTP Valore has a lighter tax rate of 12.5%, while BBVA hits you with a withholding tax of 26%.
Conclusions: What is Best?
Il comparison it’s quite forced and, if I’m honest, I wrote this article because I’m aware that it’s in the minds of many but it’s not a “real” comparison.
This is because we are comparing apples with pears: the deposit account, in fact, is a savings instrument that serves to remunerate liquidity.
The BTp Valore is, in fact, a financial investment with a time horizon of five years.
In the first case there is a total guarantee of up to €100,000 given by the interbank fund and, since it is a non-financial instrument, there is no secondary market that causes the values to fluctuate. The bank’s offer, then, is very generous and offers flexibility that is currently quite rare on deposit accounts.
In the second case, however, we are faced with the now classic issuance of BTp designed for retail investors: the risks are certainly greater given the duration of the instrument, I recommend you consult this guide to clarify the topic.
Since these are two different products, in my opinion they should not be considered as alternatives but if desired they can even be complementary because they perform two different functions: remuneration of savings (liquidity in the account) and financial investment (BTP).
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