If there is one news that has touched the hearts of ordinary families the most recently, it must be the reduction of bank interest rates.
With the accelerated development of the mainland's economy in recent decades, there is a big difference from our previous generation.
Not only have we seen a noticeable and rapid improvement in our standard of living, but we also have more and more money left over to meet our daily needs.
And with this happening, how to manage money has become a matter of concern to everyone.
Speaking of financial management methods, there are now many channels to choose from, such as Yu'e Bao, Wealth Management Connect, and various financial products.
With the improvement of financial quotient, many people think that only fixed income or stable low income is not financial management, so various stock funds or other investments have also become a very common choice.
Of course, this is only about some people, and most people, especially the elderly, are still more accustomed to putting their money in the bank, thinking that it is more worry-free.
The complex economic environment in the past two years has made many young people join the team, and the corresponding situation is that interest rates have fallen all the way.
So the question is, if you keep your money in the bank, how can you save it to maximize your returns?
In terms of the most common type of time deposit, 1-year or 3-year term, which one should we choose?
1. One year or three years, do you choose a sprint or a marathon
We can understand this in a whole new way, let's design a background for these two situations.
Recently, the Paris Olympics has been one of the national topics, so let's try to understand this matter in a sports way.
In this context, a 1-year deposit is like a sprint, do you think that a 3-year term is a long-distance run?
But after all things considered, we think that the 3-year period is actually more like running a marathon.
If taken literally, the reason why the 1-year period is like a sprint is, of course, because it takes up less time to take up funds, so why is the 3-year period a marathon?
This question also talks about the peculiarities of the sports field, you can think about the fact that on the field, sprinting is carried out on the track inside the stadium.
It is clear at a glance what kind of road you want to run, there is basically no risk, and at the same time, you can see the head at a glance, and there is no thrill and no surprise.
The three-year period is much more complicated, it is like a marathon, and the journey will not only be longer, because the venue is not in the venue, but there will be more emergencies.
There may be surprises, but of course there are risks. Some friends may wonder if this is a wrong analogy.
Obviously putting money in the bank, which seems to be almost the safest way at the moment, how can it be related to risk?
So next, let's take a look at what kind of risks will there be in this long-distance wealth marathon.
Second, the main source of risk comes from liquidity
Whether it is a one-year term or a three-year term, the first thing everyone chooses to put their money in the bank is the stability of income.
This stable income comes from the bank's interest rate, and in this respect, it is visible to the naked eye that the three-year period will be higher.
Perhaps in the actual situation, the implementation rate of each bank will have different performance, let's use the central bank's standard to make a unified reference.
According to the interest rate table recently released by the central bank, the one-year deposit rate for lump sum deposits is 1.35, while the three-year deposit rate is 1.75.
This is a difference in the starting point, the same amount of money in the bank, there will be a difference in income, and the more the amount, the greater the difference.
If you only use this number as the only variable, it will definitely be more cost-effective to save for three years, but let's not forget that there is a trap about liquidity risk.
We all know very well that if we keep the money in the bank, then the money cannot be touched for the agreed time, but we may face a temporary need for money in our actual life.
For young people, deciding to get married and buy a house may immediately require a sum of money. Not to mention if you are a businessman, you may have a need for funds at any time.
Even the most enthusiastic about stable income can encounter temporary times when they need money for illness, such as illness.
However, there is no way to change the deposit and withdrawal date, in this case, we cannot wait for the funds to be available, and we need to withdraw the money immediately.
Is this possible? Yes! But there will be losses.
According to the relevant regulations, if you do not comply with the rules of the game for regular deposits and withdrawals, even if it is just one day before maturity, then the money will be calculated according to the interest rate of the demand deposit.
What is that number? According to the standard announced by the Bank of China at the same time, it did not decrease little by little, but fell off a cliff to 0.15.
That's a huge gap.
From this we can see that although in the long run, the three-year return will be higher.
But when liquidity is taken into account, there is uncertainty about this expected return, and in the event of an accident, the loss will be even greater.
If you also consider a deposit as an investment behavior, this is called risk.
Of course, this risk does not stop at the three-year period, but will show an upward trend as we invest more time.
Knowing this, even if the 3-year interest rate is higher, many people choose 1-year instead of 3-year, is this behavior much more reasonable?
3. Differences in returns
If liquidity risk is related to natural and man-made disasters, this is relatively easy to understand.
In terms of income, most people may think that there is no doubt that the 3-year period is dominant, but it is not necessarily.
Let's talk about what happened before, everyone must have the impression that it is a continuous interest rate cut.
What does this mean? In fact, it means that the money we put in the bank, on the surface, the income is fixed, but to some extent, there are also variables.
This variable does not mean that changes in bank interest rates affect the deposits we already have in the bank.
But you can imagine if our market was in an upward cycle of interest rates right now, and now the news is not a rate cut but a rate hike, what would everyone choose to do?
There will definitely be some people who will feel that the previous deposit income is not good, and it is best to be able to withdraw it at one time and re-deposit.
At this time, the rule mentioned earlier comes into effect again, whether you withdraw it a year earlier or a day, the money will be calculated according to the current account.
As a result, users with a deposit period of 1 year summed it up, and this loss is not much, and it can be completely covered by the interest rate hike.
Immediately took out the money and enjoyed a higher interest income.
As for users with a deposit period of 3 years, it's not that they are not tempted by the new interest rate, but this loss is also very large.
There are also those who are longer than 3 years, they may have calculated in their hearts, and finally decided not to move.
Do you think that this is not a loss, anyway, after the maturity of the deposit, the interest rate that should be paid will not be less.
It is true that on the face of it there is no loss, but when it comes to gains over a certain period of time, it may not be the same.
Because there is no way to change the track, this money has been overtaken by latecomers from the perspective of income.
Fourth, the one-year period is not always dominant
We have just given a lot of examples, in fact, they all show that in some cases, a 3-year time deposit is likely to be less profitable than a 1-year term.
Then you may think that it is good to choose a 1-year term directly. Is this the right idea? We also asked people who work in banks and financial advisors about this.
Different from the estimates, they all reminded that sometimes the 1-year period is not necessarily better in terms of returns, and the specific situation needs to be analyzed on a case-by-case basis.
This judgment is based on the overall economic development environment.
Economists have been saying two things in recent years, the first is the prediction of the future economic situation, and the second thing is a very subjective feeling, that is, confidence in the future.
Thinking about these two things can be of great help when choosing between a 1-year term and a 3-year term.
Again, to use the increase or decrease of interest rate as an example, the interest rate on a deposit is not constant.
Specifically, we can look at the current United States, raising interest rates and cutting interest rates is a very important economic adjustment tool for the Federal Reserve.
When the economy shows signs of recession, there is not much living money in the market, and everyone is reluctant to invest, the Fed will choose to cut interest rates.
Because the returns are low, many people will no longer put their money in the bank to eat interest, but will take it out to invest, whether it is to the stock market or real production, which is a good thing for the market.
On the contrary, if there is too much money in the market, it will lead to inflation, and in order to limit this situation, interest rate hikes will be taken, so that everyone should not spend money and save it in the bank.
In the mainland, there was also a time when the interest rate was very high, and our parents may remember that the interest on bank deposits has dropped from 10.98 all the way in the past 30 years.
This actually reminds us that when choosing a deposit, we need to judge the future trend of interest rates.
If the conclusion is that we are all in a cycle of interest rate cuts for a period of time in the future, then choosing long-term savings in advance can be regarded as a preemptive lock in returns at a relatively high level.
The challenge with this approach is that the market itself is very volatile, and it may be difficult for us ordinary people, even economists themselves, to make accurate predictions, and can only make rough guesses.
At this time, there is an investment method that deserves our attention, and that is the diversified investment method.
5. Don't put your eggs in the same basket
The so-called diversified investment method is actually the practice of this sentence.
This method is manifested in the choice of saving time, which can be done with a combination of long and short term.
If we have a principal of 100,000 yuan now, take out 50,000 yuan to make a 3-year fixed deposit, and the other 50,000 yuan can be used to use 20,000 yuan for short-term or current savings.
At this time, we still have 10,000 yuan left in our hands, and we can also choose different investment methods for this money, such as buying some bank wealth management products, or fund stocks.
If the money is not in a hurry, we can put it in products that are riskier but more profitable.
But if we can't be sure if the money will be used, our risk tolerance is relatively low.
Then you can put it on current wealth management such as Yu'e Bao, or fund products marked with R1 and R2 risk levels of banks.
Sources:
https://www.bankofchina.com/fimarkets/lilv/fd31/202407/t20240725_25118074.html
RMB Deposit Interest Rate Table2024-07-25——Bank of China Website——2024-7-25
https://www.163.com/dy/article/IVSUB6AS0553P1N0.html
Interest rate reduction, which is the "cost-effective" between 1-year and 3-year deposits? Bank employees told the truth——NetEase News——2024-04-16
https://zhuanlan.zhihu.com/p/555078432
The interest rate of 3-year fixed deposit is higher than that of 1-year, why do some people prefer to save for 1-year? Here comes the answer - Zhihu column - 2022-08-20
https://www.163.com/dy/article/HU2EFSEP0545MJC6.html
Which is the best value between a 1-year term and a 3-year fixed deposit? Bank employees tell the truth, depositors don't choose the wrong one-NetEase News-2023-02-22
https://finance.sina.com.cn/money/bank/bank_hydt/2024-07-30/doc-incfwiqq0405790.shtml
From 10.98% to 1.35% How has the deposit rate changed in the last 30 years? ——Sina Finance——2024-07-30