Independent Financial Advisor and Co-Founder of Affari Miei
April 29, 2024
L’pending issue of BTPs Value scheduled for next May is arousing interest among private investors. These securities offer conditions and returns that seem favorable to many but, as per our habit, let’s try to better understand the functioning of this new instrument by exploring it. advantages e disadvantages.
This article talks about:
BTP Yield Forecast May 2024: What to Expect?
From 6 to 10 May you will have the opportunity to invest in the new BTP Valore. These titles can be easily purchased through your home banking, at banks or post offices, without additional commissions, limiting costs only to those of the transaction. The minimum investment required is 1.000 euromaking BTP Valore accessible even to those who do not have large sums to invest.
Although specific details on returns will only be released on 3 maggiobased on the current returns of similar securities, we can anticipate that the total gross return could be between 3.7% and 3.9% gross, equivalent to a net between 3.23% and 3.41%.
Thanks to the step-up mechanism with increasing coupons, the yield in the last years of holding could approach 4%.
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Tax Advantages
The BTP Valore offers significant tax advantages, with taxation reduced to 12.5% on coupons and loyalty bonuses, and is exempt from inheritance taxes. Furthermore, starting from 2024, it will be excluded from the calculation of the ISEE for sums up to 50,000 euros, making it particularly attractive from a tax perspective.
Risks to Consider
Investing in BTP Valore is not without risks. Changes in interest rates can negatively affect the value of the security on the secondary market, particularly in periods of economic instability. It is crucial to understand that you could face losses if you decide to sell the security before its maturity.
If you are scared by this type of risk on the BTPs you already have in your portfolio, I recommend you download our free report in which we delve deeper into the topic.
Final Considerations
A financial instrument is never “good” or “bad” in an absolute sense: this goes well for the May BTP Value.
We are faced with a bond that presents a series of risks but which enjoys the trust of many savers who, rightly or wrongly, consider the Italian state a reliable interlocutor with good guarantees.
The ideal would be BTP Valore within a diversified investment strategy that limits its risks and, as far as possible, enhances its strengths.
A common mistake among many investors is to invest an excessive portion of their capital in Italian government bonds, thus exposing themselves excessively to country risk.
If there is a general criticism that I feel I can level at all the general interest that will arise in this matter, it is precisely this: it is not the BTP itself that has problems because the dangers are known and somehow “priced in” from the market.
What we at Affari Miei have been criticizing for years is the use made by private savers who see the BTP as a tool to go “all in” and allocate most of their money to it.
Precisely this approach exposes one to a worse and much more serious degree of risk which seems to be a bit of the “trap” that, without beating around the bush too much, the government almost seems to want to place on savers called upon to buy BTPs with both hands. We talked about it in this video:
If you have already subscribed to other BTPs in the past and are looking for further information on the risks, I invite you to consult this free guide in which we analyze them precisely to provide you with a clear and precise picture of the prospects of your investment.
If you would like to delve deeper into the general aspects related to asset management, I leave you with some free resources that will surely be useful to you:
Good continuation on Affari Miei.
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