Conventional bank deposits are by far a popular way to save money. However, in their case, there is a certain investment problem – a low rate of return. Recently, the structured deposit, which banks advertise as a risk-free product, is becoming more and more popular. How does it work and is it worth wearing?

ABC Structured Depository

There is more and more money in bank accounts, and less money on time deposits. In the period between February 2020 and February 2021, we have withdrawn almost 100 billion PLN from deposits. Before the outbreak of the COVID-19 epidemic, there were more than 294 billion PLN, and in February 2021 “only” 194 billion PLN. This situation is mainly due to relatively high inflation and a very low key interest rate, which fell to 0.1% in Poland.

Therefore, deposits begin to annoy the banks that have to pay on the deposits they hold – the asset tax. Some organizations already charge additional fees from large corporate clients. There is also increasing talk of introducing commissions from large retail clients.

Such a sad truth slowly started knocking on our door…

Having frustrated the low interest rates and the addition of commission, we can decide on one of the most interesting proposals in the financial market, which is called a structured deposit . It is a savings product, which is included in the group, the so-called structured products. Let’s check what exactly a structured deposit is, whether it actually pays off, and whether it is a good alternative to fixed rate deposits.

What is a structured deposit?

A structured deposit is a modern savings product that combines the features of at least two financial instruments: term deposits and investments in financial markets . Thanks to the first option, 100% capital protection is guaranteed. for the entire term of the deposit. On the other hand, the investment component is the guarantee of a higher profit than in the case of standard interest rates on deposits or savings accounts.

Usually, a structured deposit consists of two components:

• In other words, the initial capital – is a savings instrument that is protected for the duration of the deposit. It accounts for about 70-95 percent. Deposited funds. The money is invested in safe financial instruments, such as Treasury bonds. However, less risk comes with relatively low rewards.
• The portion of the option , that is, the investment vehicle, which accounts for about 5-35 percent. Initial capital. It allows you to make a higher potential profit, which at the same time is burdened with significant risks. The scope of investment opportunities is unlimited. You can invest in stocks, options, mutual funds, currencies, stock indices, commodities and other instruments that are often not available to individual clients. They are related to the need for specialized knowledge in the field of finance and banking.

The savings part of a structured deposit is to insure the entire invested capital against loss. In turn, the investment part consists in making a certain profit for the investor.

Structured Deposit Term

The structured deposit is usually long-term. They are supposed to be for at least one year, and often for two years or more . You can withdraw funds from this deposit at any time – although this usually involves losing interest earned. In this case, you will have to pay an additional processing fee. Since the time limit for the investment completion date is short, the amount of these fees decreases.

The term of a structured deposit is much longer than in the case of a standard deposit. All because the safe part of the money invested must have a long enough time to make a profit corresponding to the amount allocated to the investments and exposed to a loss.

However, there is also, for example, an 18-month regulated deposit available in the market. So the size of the investments is much shorter than the standard metrics here. Such a product can be found, for example, in the presentation of PKO BP and Bank Millennium.

If you prefer to take advantage of traditional deposit offers, check out our deposit rating and choose the best advantageous offer!

What is the subscription period for the structured deposit?

When choosing a conventional bank deposit, you are dealing with a simple principle of operation. When browsing a particular offer, you can see the term of the deposit and the interest rate – so you place the order and the deposit period starts from then on. After the contract expires, you withdraw funds or automatically renew the deposit. basic.

It is different in the case of a structured deposit. Here , its operation can be compared to subscriptions to buy shares . During the underwriting period, the bank collects acknowledgments from all interested clients to make it available for them to start investing on the same day and on the same terms. This is important because if you decide to sign up for a certain regulated deposit, your money will be temporarily placed in a designated bank deposit until the end of the signup period.

The subscription period is the period during which you can register for a certain regulated deposit.

How to open a regulated deposit in the bank?

These types of products are only opened during subscription periods set by the banks, depending on the prevailing market conditions. During the subscription period, the regulated deposit is subscribed in the form of a blocking of funds from the account from which the subscription was made.

You can open a regulated deposit by visiting a specific bank branch or by calling its hotline. On the other hand, when you are already a client of a certain organization (you have a personal account in it), all you have to do is use the Internet or mobile banking and apply for a structured deposit.

Advantages of structured deposits

A structured deposit is a solution worth taking a closer look at. This product actually gives you a chance of making very attractive profits.

• The share capital is protected by the Bank Guarantee Fund , up to the total amount of PLN 100,000. euro. Funds in excess of the specified value are not guaranteed by BGF.
• Choice of option strategies . You have the option to invest in a variety of fundamental instruments that include bullish and bearish strategies.
• 100 percent money invested guarantees . Most banks offer a full return on capital at the end of the investment.
• There are no hidden fees or commissions . Some banking offers in the market do not charge any commission or subscription fee. A processing fee may be charged only for early termination of the deposit.
• Diversify investments through a wide range of investment products such as stocks, stock indices, indices baskets, commodities, commodities or currencies.
• Access to domestic and foreign markets. Here we mean, inter alia, the stock markets, indices, currencies and commodities. Depending on the offer, they can guarantee 100%. Return on capital at the end of the investment.
• Interest on funds during the subscription period . During the subscription period, the funds deposited bear interest in accordance with the interest rate of the bank account through which the regulated deposit was subscribed.

Best regulated deposit – how do I find it?

There is no unique rule for finding the perfect structured deposit that will bring you a certain profit. But by implementing a few basic tips, you can increase the chances of the success of your investment.

• Choose investment products that you know and understand . Although it sounds trivial, many of the shows are structured in such a way that an experienced investor might have trouble understanding them. Therefore, before choosing a particular deposit, read the terms of the contract and be sure that you understand the method of calculating the profit, the attendant risks and the instruments that are part of a particular “structure”.
• Check the conditions for early cancellation of the investment . Find out the conditions under which you can prematurely redeem the capital contributed in your deposit.
• Do not base your good performance in the past on a guaranteed future profit . A good investor understands that good historical results are not 100%. Introduction to their repetition. However, it may constitute a warning, for example, that a particular instrument is overpriced and its price is too high, and it may change in the near future.
• Avoid modern products . Structured deposit offers often appear on the market, offering products that are currently “on top”. Remember that what is fashionable does not always mean that it is more profitable and of higher value. It is important to be vigilant when choosing each “structure”.
• Diversify your capital . Don’t invest all your savings in one investment. You will make more profits when allocating money between different savings products.
• Create your own structured deposit . In many cases, with a little knowledge of investing, you can create a structured deposit on your own. In such a case, you will only need an active brokerage account, such as XTB or eToro , which are currently the most popular. The biggest advantages of building your own “structure” are low costs and high flexibility. You can make such an investment when you want and for as long as you want. The experience you gain by creating your financial product is invaluable .

Risks related to investing in structured deposits

To begin with, it is worth specifying what exactly we mean by risk – because when we talk about it, unfortunately, regulated deposit is not without it.

• market risk . The profit from a structured deposit depends on the behavior of a market variable, such as a currency exchange rate. If the investor’s expectation fails, he will only receive an amount equal to the guaranteed capital. Depending on its structure, certain investment instruments may yield less profit than the increase/decrease of the underlying instrument.
• credit risk. You also need to be aware of the credit risk, that is, the bankruptcy of the bank in which you decided to open this type of deposit. Therefore, in the event of bankruptcy of the enterprise, it will receive funds up to the amount guaranteed by the Bank Guarantee Fund.
• product complexity . It comes down to the risks related to the nature of the product and its documentation. The more complex and complex the product, the more non-normative its documentation, along with the descriptions contained in it. As a result, understanding how the chosen tool works can be troublesome.
• tax risks . During the term of the deposit, there is a risk of changes in tax regulations, which may make investing in specific instruments unprofitable.
• liquidity risk. As the holder of a regulated deposit, you have the right during the subscription period (the period during which you can register for a certain deposit) and close the investment during the investment period, paying 100%. capital. Conversely, when you withdraw your deposit after the subscription period and before the investment is completed, you will have to pay a processing fee. Its amount depends on the conditions of a particular bank.

Structured deposits are covered by a capital return guarantee, i.e. if the investment made by the bank causes a loss, it will refund the full amount of the invested capital to the client. Of course, not every financial product has a full capital guarantee. Some of them, for example, may have an incomplete guarantee of a return on capital at the level of 70-90%, but in return they give a higher profit. Therefore, before opening a regulated deposit, it is worth checking the conditions under which the institution guarantees the return of capital and how it built the proposed investment vehicle.

Is the structured deposit profitable?

The investment portion of the structured deposit may generate tens of percent of the profits. Well, maybe … it is unfortunately just a theory that does not always reflect in reality.

Let’s say you set up a 100 percent regulated deposit. Capital return guarantee in the amount of 10 thousand. PLN for 5 years. In this case, 90 percent. The money invested is invested in safe treasury bonds. After this time, the invested amount is returned to your account. However, the source of potential profits is the investment part. Here you decided to invest 10 percent. In WIG20 stock index options. Options will pay off if the index, after an investment period of 5 years, is at a higher level than when you bought it. Otherwise, when WIG20 goes down, the options will not bring you any income and the invested amount will be forfeited.

Diversity of investments allows you to diversify your portfolio, thanks to which you can limit the loss of the entire deposited capital on structured deposits. Dividing funds between different instruments also allows you to achieve higher returns than in the case of time deposits. In the end, however, how much you earn depends on the banking terms offered.

What determines the profit of the structured deposit?

In conclusion, it is not entirely true that structured deposits are risk-free products – in other words: “money-making machines”. By deciding on such an investment, you can actually earn, but also realistically lose…

Much depends on the amount invested in the structured deposit and the duration of the investment . However, in reality, profit is determined on the basis of the price behavior of the underlying asset , the so-called indicator, at specific time periods. Examples of these types of assets are shown below.

• exchange rate . One of the most common types of underlying assets. Deposits that depend on a change in the exchange rate assume that during their term, a certain rate will behave in a certain way, such as increasing or remaining the same. It is worth noting that the exchange rate depends on many factors, including the economic situation in the world, the political situation, investor sentiment, or changes in the economy. Therefore, over a long period of time, one can only speculate on the value of the coin.
• Raw materials and precious metals . Banks sometimes offer investors structured deposits whose primary assets are gold, silver, crude oil, natural gas, factories or other raw materials. Such investment involves speculation on prices for, for example, crude oil on world markets. This type of deposit also carries significant risks, because despite the belief that the price of crude oil should rise, this may not be the case. Then your profit will not be as high as you expected.
• stock indices . Structured deposits may also be based on Polish stock exchange indices, such as WIG20 or WIG30, but also on global exchanges, such as Euro Stoxx 50, Nikkei 225 or S&P 500. These indices present the general position of a particular exchange. Unfortunately, like the exchange rate, they are subject to fluctuations. Therefore, by investing in a structured deposit based on stock indices, you risk losing profit from this instrument.

It is also clear that the more money you put on the deposit, the higher your potential earnings. Also, the so-called “robust” investment can bring you profits of up to tens of percent. The support of experienced brokers who make decisions based on historical data and their professional experience is of primary importance here. The bank’s margin also has a significant impact on the achieved results . Therefore, even if the deposit is free and you do not have to pay a commission to take advantage of the offer, the costs may be hidden in the subscription fee or processing fee.

Fees and other costs for structured deposit

The bank may charge additional fees for the structured deposit.

• Subscription fee . For example, if you put 5 thousand zlotys on a deposit. PLN, the foundation may collect 5 per cent. Subscription fee. As a result, your investment working on profits will amount to 4,750 PLN. Not every bank applies this type of commission.
• Administrative fees. It is collected at the time of opening the deposit and does not weigh down the investment profit. It ranges from 5 to 7 percent.
• handling fee . This type of commission is charged at the time of early termination of the deposit. Usually, its amount decreases depending on the time remaining until the end of the structured deposit agreement. Not every bank charges such fees to customers.
• Belka tax . You must also deduct the amount paid, the so-called 19% capital gains tax.

Can you lose on a structured deposit?

It should be clearly stated that if the investment is done carefully, it will bring huge profits. Plus the capital contributed when it is 100%. Protected, guarantees the return of all invested funds. Of course, as long as you reach the end of the investment. Otherwise, the bank will reduce the payment by management and processing fees.

However, the fact that it is a long-term investment works against the structured deposit. Funds are “frozen” for years, and banks do not guarantee their protection from inflation. Let’s add to this the fact that you could have invested in another product that brought a real profit at that time. You can make money by investing cash, for example in treasury bonds or in a brokerage account .

There are a number of examples where opening a regulated deposit could result in a loss. Then it will not return you 100 percent. Funds deposited, and only a certain part, eg 80-90 per cent.

1. There is no full guarantee of return on capital. This is one of the cases where the money invested in a product without full protection leads to a loss. In the market we can find offers that provide protection for the invested amount, for example at 80%. This means that for every thousand PLN in deposit, PLN, you can be sure of a refund of PLN 800. There are also regulated products that do not give any guarantees. In their case, the real loss may reach 100%. what you invested.

Tip -> lack of full collateral is an opportunity to make a much higher profit than deposits with a “structure” of 100%. Return guarantee. This is because a larger pool of funds may go to the investment portion of the deposit.

2. Early breakage of the structured deposit . You also will not earn if you close your deposit before the end of the contract period. In such a situation, you always have to take into account the additional costs, which range from several to tens of percent. Examples of such costs are, for example, the commission on the sale of bonds, options or mutual fund units, and the spread of the transaction.

3. Exchange rate risks . If you decide to double your money in an instrument exposed to exchange rate risk – you also have to take into account the possibility of a loss. Examples of such instruments are currency options, such as the euro against the dollar. It is very likely that less money will be returned to you as a result of exchange rate movements than it was before you started investing.

How about creating a structured deposit on your own?

If you do not want to be limited to banking offers, which for some reason do not convince you, create your own structured deposit . For example, it may consist of a deposit and an investment fund, or a deposit and shares. It all depends on you.

عليك فقط أن تتذكر توزيع هذه الأموال على أدوات وأسهم الشركات المختلفة. يمكنك أيضًا تحديد مدة الاستثمار بنفسك أو مستوى المخاطرة أو مقدار جزء الاستثمار. ميزة إضافية هي أنك لن تضطر إلى دفع هامش للبنك ، وستكتسب خبرة قيمة ستؤتي ثمارها في مساعيك المالية الأخرى. بالطبع ، في هذه الحالة أيضًا ، يجب أن يكون لديك مجموعة واسعة من معرفة الاستثمار والوقت لاختيار وتقييم المنتجات الاستثمارية.

هل يستحق الاستثمار في الودائع المهيكلة؟

لا يتم تضمين الودائع المهيكلة في ترتيب الودائع المصرفية . السبب بسيط. إن التقلب المصاحب لأسعار الأسهم يعقد تكوين نمط من المكاسب والخسائر المحتملة. جميع المعلومات المتعلقة بأسعار الفائدة تقريبية فقط – ومن الصعب حقًا تقييم ربحية مثل هذه المحفظة الاستثمارية.

لذلك ، إذا كنت ترغب في البدء في الاستثمار بمساعدة وديعة منظمة ، فإن الأمر يستحق الحصول على بعض المعرفة المالية مسبقًا ، والتي ستساعدك على التنقل في موضوع الاستثمار. من الضروري أيضًا التحقق من شروط عقد البنك. انتبه بشكل خاص للجزء الاستثماري من الودائع والأدوات التي يمكنك استثمار أموالك فيها. اقرأ منتديات الاستثمار وآراء الأشخاص الآخرين الذين يستخدمون نموذج الادخار هذا. أخيرًا ، تذكر ألا تستثمر كل مدخراتك. قد يكون الإنهاء المبكر للعقد مكلفًا ، لذا خصص أموالًا لهذا الغرض لن تحتاجها على الأرجح في السنوات القليلة القادمة.

لا تستثمر كل مدخراتك في وديعة مهيكلة! يجب أن يكون أحد منتجاتك الاستثمارية.

مصدر:

تقرير FK ، الشؤون المالية للبولنديين خلال COVID-19. كيف أثر الوباء على محافظ البولنديين وعاداتهم المالية؟

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