Where is it more profitable to open a deposit in rubles and other currencies with the highest return?

Citizens, keep your money in the bank

There are many who do not want to have anything to do with the bank at all. This is understandable. The state has already given us “black” Mondays and Tuesdays, when rubles became pennies. The Central Bank takes away the license of another bank almost every month.

There are those who use the purchase of cash currency as a way to save their money and make a little money from exchange rate fluctuations. But for this you need to have at least basic knowledge about the foreign exchange market, constantly be aware of what is happening and be able to react instantly. Not everyone can do this.

The result: in the hands of Russians, under the mattress, there are more than 3 trillion rubles, an average of 38 thousand rubles for each person in the country.

This seems more reliable to them.

Many people don’t even think about the fact that they let a burglar into their home and allowed him to steal money from them. The robber's name is inflation. Therefore, citizens, take your money to the bank!

Let’s make a reservation right away: the article is not for those who have saved up very decent money. With good capital, you need to enter the real estate market or become the owner of your own business.

Dividend shares

If companies pay dividends to their shareholders, then in addition to the growth of quotes, we have additional income. Real money.

Unlike Russian companies, which usually pay dividends once a year (less often 2 times, some even pay 4 times a year), most American companies pay dividends to shareholders consistently once a quarter.

The average dividend yield is just under 2%. You can find papers with higher payouts - 3-4%.

Just like stock prices, dividend levels rise over time. There are companies that pay dividends, and most importantly, increase them every year (dividend aristocrats) for 10-20 and even 50 years!!!

And again the problem comes down to the choice of papers. Although if you plan to make long-term investments (for many, many years), then perhaps such a dividend strategy will be just right.

I bought myself a package of various dividend shares. And it doesn’t matter (at least not very critically) whether the price of securities rose or fell. You are guaranteed to receive dividend income in foreign currency. And the growth in share price over time will be an additional bonus.

How to choose your bank

You need to approach the choice of bank responsibly:

• the bank must participate in the DIC program (deposit insurance system). Under this program, the state insures the deposits of the population through an agency. In the event of the bank’s license being revoked or its bankruptcy, the state will return the depositor’s money, but not more than 1,400,000 rubles;
• the bank must have a license to carry out deposit transactions;
• look at the Central Bank website to see how the financial reliability of your bank is assessed;
• the bank must be present on the Russian market for at least 10 years;
• read depositor reviews on the Internet.

Is it worth opening a foreign currency deposit - reviews from investors

Before making any purchase, we are used to reading reviews on the Internet of those people who already have the experience we need in this matter. Looking for an answer to the question: “Is it worth opening a foreign currency deposit?”, I recommend taking a look at forums dedicated to banking topics and reading the reviews of depositors - holders of foreign currency deposits.

I also “wandered” through forums and review sites and here are the conclusions it allowed me to draw:

• there are almost equal numbers of positive and negative reviews about similar products;
• the majority of forum members are inclined to invest currency in large banks with state participation;
• some experienced investors advise not to keep “all your eggs in one basket” - they recommend opening multi-currency deposits;
• There are also those who consider only ruble accounts for investing their savings.

Read, analyze, make the right decisions.

What we have - what we get

First, let’s figure out what we ourselves have and what we will get:

1. Let's decide on the initial amount that we are ready to deposit. All banks indicate its minimum level. Often the deposit amount and the interest on it are interrelated. The larger the amount, the higher the percentage.
2. Is it possible to replenish your deposit, how often and what is the minimum amount of “addition”.
3. Is it possible to withdraw money if necessary and how will this affect the interest?
4. How is interest calculated, can it be withdrawn or does it only supplement the deposit amount (capitalization).
5. Conditions for early termination of the deposit (life goes on, there are different situations).
6. The deposit term also needs to be clarified: for different amounts it can also be different.

PAMM accounts

Another high-risk instrument where you can invest dollars is PAMM accounts. This is a special mechanism for buying and selling currencies on the Forex market.

The investor transfers the currency to a brokerage account opened with a company with access to Forex. He chooses which manager he can entrust his money to, whose strategy is more reliable and profitable. Links your account to the intermediary's account. The latter trades his own dollars and the dollars of other investors. Profits are distributed among the participants, and the manager is paid a commission for his work.

The investor can expect:

• high profitability and risk of losing almost everything;
• low entry threshold (from $10);
• hope for the competence of the account manager;
• high management fees (up to 50%);
• nervous monitoring of transactions, when in one day you can earn tens of percent or lose all your capital.

Banks offering the highest interest rates on deposits in 2021

Here is a table showing the banks offering the highest interest rates on deposits for 2021.

The selection was carried out among financial organizations that have a high degree of reliability, where your deposits (up to 1,400,000 rubles) will be insured by the Deposit Insurance Agency (state).

You should not invest your money in a bank you are hearing about for the first time, even if it offers the highest interest rate.

A little about foreign currency deposits. The highest interest rate on foreign currency deposits is offered by Rosselkhozbank - from 4 to 4.5%.

True, the initial amount must be decent (from 80 thousand dollars) and the deposit period must be at least a year without replenishment or termination. Vostochny Bank offers 4.2% per annum for a deposit amount of 26 thousand dollars, the deposit period is 3 years.

Other banks give less interest: from 3% to 2.5% per annum. The explanation is simple: instability of exchange rates. But at such rates, it is unprofitable to keep your foreign currency savings in a bank.

I deposited $1,000 for six months at an interest rate of 2.5, received $12 in income, and in a year it was less than $30. Not enough, but I repeat that this is better than storing currency under your pillow.

As the reporting period approaches (on the eve of the New Year holidays and until the end of January), many banks hold promotions during which the interest on deposits increases. Sometimes such promotions are held throughout the year.

There are individual offers for certain categories of clients (VIP, salary clients, pensioners). Such promotions are announced via telephone SMS messages.

The interest on your deposit can be slightly increased if you make a deposit online. Many banks offer such offers.

Stock

In our case, shares of American companies denominated in dollars.

Where can I buy?

Or through Russian brokers providing access to US stock markets. Or directly through American brokers.

In the second case, the minimum entry amount will be 10 thousand dollars or more.

Purchases are available through domestic brokers, but you will have to take into account very high commissions (literally multiples of the usual level of expenses for transactions with Russian securities).

Expected potential return……unknown. You can get several tens of percent profit per year. And vice versa. Lose the Nth amount as a result of a decrease in quotes.

The main problem is the correct choice of papers. And for this you need to have at least basic knowledge in fundamental analysis. So that it does not happen that after purchasing a stock that has been growing for several years, its value begins to decline.

But even knowledge and careful selection of papers do not guarantee a positive result.

The problem can be partially solved by diversification, that is, the simultaneous purchase of several shares of different companies. The loss from the fall of one or two securities will be compensated by the growth of others.

The minimum investment period should be 5-8 years. This, of course, does not mean that if you buy shares for 2-3 years, you will not earn anything. But it is important to understand that in such short periods, due to high volatility, there is a high risk of prices falling.

In the longer term, you can count on 8-10% annual returns.

Expert opinion on interest rate changes in 2021

Interest rates on deposits increased throughout 2021. There were reasons for this:

1. The Central Bank raised the key rate (7.5%).
2. The inflation rate has increased. Banks had to raise rates so that new clients would come to invest money with them.
3. There are fewer and fewer people wanting to keep money in the bank due to a slight increase in income. The bank's profit from this segment fell. And bank capitalization too.

The interest rates offered today, according to experts, are unlikely to become higher. According to forecasts, they will remain this way until the spring of 2021, and then begin to decline. Therefore, you should hurry with your deposits.

ETF on the Moscow Exchange

The main problem of choosing the right or wrong choice of individual securities (stocks or bonds) for investment is solved quite simply: by purchasing shares of ETF funds for these asset classes.

In simple terms, an ETF contains dozens or hundreds of different stocks or bonds. By purchasing a fund share, you receive a piece of this pie in proportion to the invested funds.

Recommend: What are the benefits of ETFs?

Each ETF has a specific focus. For example, it invests only in US, German or Chinese stocks. By purchasing an ETF for the German stock market, you will receive dozens of the largest German companies (Adidas, Puma, BMW) in one package for little money.

If you buy an ETF for American stocks, you will become a co-owner of more than six hundred companies (Google, Amazon, Facebook, Tesla, Coca-Cola).

The same applies to Eurobonds. You can buy one ETF fund, which already includes most of the largest companies in Russia.

How much does it cost? You will be surprised - inexpensive. Within $50-100 per ETF share. Compare this with the price of one Eurobond of several tens of thousands of dollars!!!

Minuses:

As always, this is a minimum level of investment of several years.

And..... Russian ETF funds do not pay dividends on shares and coupon income on bonds to their owners. All cash flow is reinvested. Making the cost of one share more expensive for the income received.

On the one hand, this is even good. Tax payment costs are reduced. On the other hand, there will be no source of income in the form of constant payments in real money.

Owning ETFs is not free. You will be asked for a commission of an average of 0.9% per year. From the cost of purchased ETF shares.

There are only a little more than 10 ETF funds from Finex on the Moscow Exchange.

How much can you earn?

I think the answer “unknown” will not suit you.

But still. Depends on the investment period. For example, over the past few years the American market has grown by 12-15% per year. But this does not mean that this will always continue.

In a year we may see continued growth or decline. Easily.

Again, looking at history, the average annual return of the American market is about 6-8% per year.

Let's summarize what has been said

1. Keeping money at home is unwise and economically unprofitable. Inflation will wipe out all your savings.
2. Keeping money on deposit in a bank is not very profitable, but there is a possibility of maintaining their purchasing power and a small but increase.
3. It is better to make a deposit in 2021 as quickly as possible: before the spring of this year. Experts expect a reduction in deposit rates.
4. Choose a bank responsibly, balancing high interest rates with reliability. Be sure to check if the bank is on the list of members of the state deposit insurance system.
5. Keep your money in different banks if the amount of savings is over 1,400,000 rubles. If the license is revoked or one of your banks goes bankrupt, you won’t have to get the rest of the money.

ETFs from foreign brokers

The meaning is similar to buying an ETF on the Moscow Exchange.

But there are nuances:

1. Entrance prices start at ten thousand dollars.
2. The choice of ETFs is simply huge. Several hundred different funds.
3. The commission for owning funds is tens of times lower than that of ETFs from Finex. For example, an S&P 500 index fund charges 0.04% management fee. Instead of 0.9% from Finex.
4. All US ETFs pay dividends or bond coupons to owners.
5. There are real estate funds (Reit) that are not available in Russia. With a yield of 5-8% per annum. Naturally in dollars. You can even find it with a monthly payment.

Methodology

The assessment covered the 100 largest banks in Russia in terms of assets at the time of preparation of the material. Product data is taken from their official websites.

The best foreign currency deposits of 2021 were determined by the maximum rate of products in the entire line for US dollars and euros. Excluded from consideration of proposals for pensioners were complex deposits, for example, with investment, as well as on demand.

The rating is based on the maximum bid. Further distribution of places is conditional. Based on the width of the product line. In particular, the presence of additional functions for deposits in a foreign currency, options for other currencies, etc.

Sources:

• Bank websites;
• Central Bank of the Russian Federation - data on funds raised by banks;
• Central Bank of the Russian Federation - monitoring the maximum rates of credit institutions.

about the author

Dmitry Sysoev - higher education in economics from Sumy National Agrarian University with a degree in Organization Management. Analyst of the banking sector and microfinance market. Experience working in specialized commercial structures - both banks and microfinance organizations. For more than 5 years, he has been creating useful content for consumers of financial services and organizations - information and analytical articles on the banking sector and the microfinance market. [email protected]

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Interest payment methods

To understand exactly how a deposit works and choose the best deposits, it is advisable to first consider the basic operating principle of banks.

General rules of deposit relationships:

1. The bank attracts free financial assets of organizations and citizens into deposits, then uses them to generate income.
2. The bank pays the owners of the funds certain amounts for the use of money, usually the level of payment is calculated as a percentage of the invested amount.
3. Interest is paid to the deposit owners or added to the amount in the account.

General rules for calculating interest:

• Interest rates are determined and disclosed to the client before he is asked to invest.
• Demand deposits offer the lowest interest rates.
• Usually, a calendar year is taken as the estimated period for calculating interest - then the term “annual interest” appears.
• Interest is paid in accordance with the terms specified in the agreement.

Interest payment options:

1. One-time payment - in this case, interest is paid at a time, most often at the time the deposit is returned to the client. Short-term deposits and deposits with interest capitalization work on this principle (when interest is added to the principal amount and then interest is accrued on the larger deposit).
2. Periodic accrual – the deposit term is divided into time periods for which interest is accrued and then paid (month, quarter, year). The interest rate is calculated on the total amount for the specified period, payment is made in full. Interest is not added to the deposit amount; it is further calculated on the initial deposit. If the client has a significant amount in his deposit account, he can live on the interest and then this payment option is considered the most acceptable.

Summary

To summarize all of the above, I can only add that a bank deposit is only a tool for preserving the solvency of funds, and is by no means a way to increase them. The interest that you will receive after the expiration of the deposit will only cover losses associated with inflation. If you really want to make money, then think about investing your savings in more profitable, but at the same time risky, financial instruments. Make the right decisions and start getting rid of the money under your pillows . Have profitable deposits for you, and see you soon!

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