Good evening! What is more profitable: bonds and deposit?
What is more profitable: bonds and deposit?What is more profitable: bonds and deposit?
It would seem that, the answer to this question is obvious - of course, bonds. Otherwise, why are they needed then?. On any website on the Internet, any blogger or broker has a million articles about, how much more profitable the bond is in comparison with the deposit. And it is this, ostensibly, the advantage is almost all put first in order to, to attract people to the world of investment.
Is that really the case?: are bonds really more profitable than deposits, all other things being equal?? Today I will dispel a common myth on this score..
Primarily, Mean, that despite the fact, that bonds may yield to deposits in terms of yield (what will be analyzed today using the example of bonds and deposits of Sberbank and VTB), I am a supporter of investing in bonds, rather than deposits, what I will write at the end of the post.
Very often this happens., that the real yield on bonds of ordinary people is significantly lower, what people think of their bonds. For example, a person can own a bond and think, what does she bring 5,2% per annum, but its actual profitability 3,2%.
Why?? All because, that everyone uses special bond services (me too) or look at bonds in the broker's app. The most popular bond services - Smartlab, Доход.ру, Rusbonds, well and broker everyone has their own. This is all very good, except for one thing - profitability.
There are no services, which would correctly calculate the bond yield, namely, taking into account taxes, broker commissions, bond liquidity and excluding reinvestment.
After all, if we compare deposits and bonds, then you need to put them on an equal footing, is not it? With a simple deposit up to 1 million. rub. no commissions and taxes. But bonds have it all., besides, you need to "catch" the favorable price of the bond when buying (liquidity). In addition to this, most services and brokers consider the effective yield of bonds to maturity, ie. this is an analogue of a deposit with interest capitalization.
Therefore, it comes out, that even in, it would seem that, large and serious information resources and authoritative bloggers you can see articles a la “see, how much are bonds more profitable than a deposit ". They can be understood, because. they don't bother looking at this profitability in public services. Then people buy these bonds and think, what get more, than on deposit. But really., exactly the opposite. And after all no one will notice it.
As an example, I cited bonds and deposits of Sberbank and VTB. The table below in 3 column showing bond yields, presented on the websites of banks. Further profitability on the site Smartlab.ru (effective and also without taking into account commissions, taxes, etc.). IN 5 in the column I gave my calculation of the yield of these bonds, taking into account all commissions, taxes and excluding reinvestments in these bonds, ie. that profitability, which the investor will actually receive, what is called, "On hand". Finally, in the last column gave the yield on deposits in these banks.
Bonds and deposits of Sberbank and VTB Bonds and deposits of Sberbank and VTB
As seen from the table, the actual received yield of bonds is one and a half percent lower than declared on the websites of banks or on specialized services. And to conclude that, which is more profitable - bonds or deposits, you need to compare the situation "other things being equal", ie. the last two columns from the above table.
Usually, for short periods of one or two years, net bond yields will almost always be lower, than on deposit. That's why, when you see another article somewhere about "super profitable bonds", specify, how is this yield calculated: Are commissions taken into account? taxes in it, are reinvestments cleared from this return. IN 99% cases this is not done, so you can safely subtract on average 1,5% of the reported returns.
Does that mean?, that you don't need to invest in bonds? NO! I gave the situation "all other things being equal", ie. analyzed the bonds of banks with their own deposits. But there are many smaller manufacturing companies with higher bond yields.. Secondly, bonds can be bought and sold at any time, without waiting for the end of the term. Thirdly, when buying a bond, the investor provides himself with the yield to maturity, but he can follow this bond and sell it at a better price and get a higher yield to maturity. And the benefits of bonds don't end there.
Therefore, although it is impossible to speak directly, that bonds are more profitable than a deposit, subject to correct comparison of these instruments, however, bonds are seen as a more attractive financial instrument in terms of investment, if you approach the assessment of their profitability and risk correctly.
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