Is it worth buying postal savings bonds?
According to the calculation simulations of return on postal savings certificates provided by Italian posti earnings for savers they can be interesting, albeit well below – for example – those guaranteed today by the 10-year BTP.
If you have a medium-long term investment time horizonthe saver is exposed to the positive effects of the accumulation of interest for a greater number of years, a factor (and patience) that guarantees a good income from the interest to which he is entitled.
Doing some simple math, anyone who buys a ordinary postal savings certificate with expiry 20 years investing 5,000 eurosupon expiry he has the right to receive from the State – via Poste Italiane – 8,155.89 euros netfor a earnings of 3,155.89 euros.
Did you know that if you buy €5,000 of postal savings bonds you earn over €3,000?
There investment simulation in postal savings bonds that we have done – for explanatory purposes only – involves the subscription of a ordinary savings certificate. In fact, there are several types of BFP.
The maximum duration expected for the ordinary course is 20 years. Interest is recognized every two months but only starting from the year following the subscription date. The gross annual yield to maturity is 2.75%.
By purchasing 5,000 euros of ordinary postal savings bonds today, when it expires (June 2044) you will get 8,155.89 euros back, already net of the applicable taxes.
The tax regime applied on the returns of postal savings certificates facilitated – just as expected for government bonds – with a rate of 12.5%. This means that the saver pays 12.5% tax on the accumulated interest. But, as already specified, in the example above the taxes due have already been deducted from the indicated return.
Attention: in addition, savers are required to pay a0.2% stamp duty of the invested capital, but only if this exceeds 5,000 euros.
One year after signing up, with BFP it is always possible liquidate the investment early and request reimbursement of the capital invested and the interest accrued up to that point.
Ordinary interest-bearing bond yields
The yield of the ordinary savings bond increases over time, according to the following scheme:
| Holding period | Gross annual effective yield at the end of each holding period | Holding period | Gross annual effective yield at the end of each holding period |
|---|---|---|---|
| at the end of the 1st year | 0.50% | in the 11th year | 1.70% |
| in the 2nd year | 0.50% | in the 12th year | 1.77% |
| in the 3rd year | 0.67% | in the 13th year | 1.90% |
| in the 4th year | 0.87% | in the 14th year | 2.01% |
| in the 5th year | 1.00% | in the 15th year | 2.11% |
| in the 6th year | 1.12% | in the 16th year | 2.23% |
| in the 7th year | 1.25% | in the 17th year | 2.36% |
| in the 8th year | 1.40% | in the 18th year | 2.48% |
| in the 9th year | 1.53% | in the 19th year | 2.61% |
| in the 10th year | 1.62% | in the 20th year | 2.75% |
Attention: the average gross yield is 1.62%, much lower than the Italian ten-year bond and other BFPs available at Poste Italiane.
Where to buy postal savings bonds
Postal savings bonds they can be subscribed online, in the case of holders of a Libretto Smart or a BancoPosta account enabled for online device services. Not only on Risparmio Postale online and BancoPosta online, but also from the BancoPosta app.
Alternatively, you can purchase at all post officesequipped with identity document and tax code.
Final thoughts
The objective of this article is to show in a simple way how it is possible to increase your capital through a practical example of an investment considered among the safest, as it is guaranteed by the Italian State. Especially from a long-term perspective, in fact, it is possible to exploit the power of interest rates to increase one’s capital, while it remains more than necessary to build a well-balanced investment portfolio based on one’s risk profile.
Like postal savings certificates, there are various other instruments that can adapt to the correct management of individual savings, such as government bonds, deposit accounts, postal savings books.
