Traditional fixed term, UVA or what else?

Traditional fixed term, UVA or what else?

The persistent inflation and the drop in rates have generated uncertainty about where to invest: Fixed term, UVA fixed terms, virtual wallets or investment funds? It is crucial to compare these alternatives to determine which one best suits each situation. This situation becomes critical as inflation exceeds the interest rate, raising concerns about maintaining purchasing power.

The virtual walletsFor example, They invest in fixed terms or investment funds immediate rescue. However, they have experienced a decrease in their rates, although the adjustment has been slower due to their long-term investments, taking advantage of previous higher interest rates, which reached up to 110%.

Unlike the accounts of conventional savings, virtual wallets They are usually more affordable, without requiring a minimum balance or imposing maintenance fees. This makes them attractive to a variety of users in different economic sectors. However, it is important to be careful with the maximum limit for which they pay interest, since some of them may have limitations in this regard.

Ranking by Rates in Virtual Wallets

This wallet has introduced categorization levels based on consumption through the app. It pays 82.20% annually, which in 200,000 pesos invested means 231,700, which is 6.85% monthly.

Naranja X tops this ranking by promising an annual rate of 82% (6.83% monthly). With this offer, a balance of $200,000 would become $213,667.

Prex offers an attractive 82.30% annually, equivalent to 7.71% monthly. Thus, an investment of $200,000 would grow to $213,716 in a period of 30 days.

With an annual interest of 81.80% (6.82% monthly), Ualá ensures that an initial investment of $200,000 will become $213,633.

Mercado Pago offers a return of 79.90% annually, which represents 6.65% monthly. A deposit of $200,000 on this platform would generate a total of $213,300 after one month.

It must be taken into account that the wallet rate is fluctuating so we cannot expect that performance over time, they will end up converging to the levels of the fixed terms.

What about fixed deadlines?

Fixed term rates have been adjusted again. As of March 27, 2024, several banks have reduced their interest rates for 30-day fixed terms. Check the chart below for the latest rates offered by major banks! Remember that rates can vary and it is important to stay aware of updates to make informed financial decisions.

Fixed deadlines

UVA Fixed Term

A UVA Fixed Term is an investment alternative protected from inflation, since the amount invested is converted into UVAs, an indicator that is updated daily based on the Consumer Price Index (CPI). The minimum term of a UVA Fixed Term is 90 days.

Below I show you a simulation of one for 200,000 pesos at 180 days:

Source: Calcularsueldo.com

In this case, with the inflation estimated by the REM (Economic Expectations Survey), it gives us a return to be paid on 09/23 of this year.

Traditional fixed term

If you invest two hundred thousand pesos in a traditional fixed term, the monthly interest rate is equivalent to 71%, so you would earn $11,671.23 every 30 days.

If we compare traditional fixed term with virtual wallets, we see that the latter pay more, but we have more liquidity, which for a few days is a better alternative.

Now let’s see the options that can be done through Investment Accounts at a broker or bank:

Money Market Investment Funds

The money market investment funds They typically invest in a variety of high-quality, short-term fixed income financial assets. These assets have shorter maturities and are highly liquid, meaning they can be easily converted into cash without incurring significant losses if necessary.

Money market mutual funds are suitable for conservative investors looking to preserve capital and earn a modest return in the short term, as well as those who need a safe place to keep cash available for immediate future needs. However, it is important to keep in mind that although money market funds are generally considered safe, they are not free of risks, such as interest rate risk, as I step now, which lower the expectation of return.

Today investment funds of this type are having approximate returns between 72 and 75% and some with the best performance in the market are:

There are t+0 funds that are redeemed on the same day and funds that are t+1 redemption, which are those that are redeemed the next day once requested, can also be used for the short term, which can be as:

  • Adcap Savings Pesos
  • IEB savings
  • Quinquela Pesos
  • Megainver Savings
  • Cohen Fixed Income Plus
  • Adcap Pesos Plus
  • Allaria Savings Plus

Stock securities: another interesting option

The placing bonds They are a type of investment that works quite simply. Basically, a surety is an agreement between two parties: the investor (called “placer”) and a counterparty who is the one who takes the funds and posts securities to guarantee the operation, the BYMA (Bolsas y Mercado de Argentina) or MAV (Mercado Argentino de Valores) are those who mediate and guarantee compliance.

They can be made for 1, 7, 14, 21, 30 days and more terms: and they are paying between 71 and 75% according to those terms.

Finally, it is important to consider the different investment options available and evaluate which one best suits your needs and financial circumstances. Here is a comparison to help you in your decision:

Fixed Terms vs. Virtual Wallets

  • The virtual wallets They offer attractive interest rates, but their yields may vary and may converge to fixed-term levels over time.
  • The traditional fixed terms They guarantee fixed interest rates, providing stability and security in returns.
  • Thes virtual wallets They may be a better option for short-term investments due to their greater liquidity, while fixed terms are more suitable for longer-term investments.

Fixed Terms vs. UVA Fixed Terms

  • The UVA fixed terms They offer protection against inflation by adjusting for the consumer price index, which can be beneficial in inflationary environments.
  • The traditional fixed terms They offer fixed interest rates, but do not protect against inflation, which can erode the purchasing power of yields.

Money Market Investment Funds vs. Stock Cautions

  • The money market investment funds They provide a safe and liquid alternative for conservative investors, with modest but stable returns.
  • The stock sureties They offer competitive interest rates and flexibility in investment terms.

Ultimately, choosing between these options will depend on your financial goals, investment horizon, and risk tolerance. It is advisable to diversify your investment portfolio and seek professional advice if necessary to make informed decisions and maximize your long-term returns.

Emerald Capital Manager

Source: Ambito

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