Cash in the bank or kept under the mattress of how much they devalue


Savers think that having cash on the current account or at most, as they say, under the mattress is a sure thing, but in reality it is not. In fact, the money on the current account or hidden in the house suffers two negative phenomena: inflation and current account management costs.

Current accounts: the deposited cash is written down

The sums that companies and families have in contact or on liquid deposits accounts, are around 1,400 billion euros, a substantial sum that has increased over the years despite the spread of many alternative investment instruments to manage savings.

The numbers recorded on the deposit accounts and current accounts are the highest in the last 20 years, this suggests that Italians are afraid to invest alone or spend money and that they do not invest their savings in instruments that are able to protect capital and to make it return.

Inflation is the number one enemy of money, it devalues ​​the purchase value making it halve in a span of 20 years, in fact whoever has the money at home for 1,000 euros after 20 years is worth just over 588 euros. This means that with what you could buy 20 years ago with 1,000 euros today you buy half. If they are held for 10 years, their value today is 875 euros, while for 5 years the purchasing power is 967 euros. So it's certainly not worth keeping money this way.

Current account: negative rates depreciate cash

For those who have left their savings on the current account, they certainly have not gained much, in fact perhaps it has gone even worse. In fact, in recent years credit interest rates have practically zeroed out. The times are long gone when the money deposited in the current account received an annuity, even if small they helped to keep the capital intact and maybe even increased it a little. Currently the banks practice an interest rate towards customers of 0.37% on free deposit accounts, while for time deposit accounts, that is for those deposits that for a certain period you cannot withdraw the capital because they are tied up, make an average rate slightly higher. On current accounts, currently the average rate is just 0.04%, very close to zero.

In this last period there has been talk of the tendency of the banks to even apply negative rates, that is the current account holder to pay the bank to keep the money on the current account. This was also announced by the Unicredit CEO for deposits of over one million euros.

Management fees

In addition, at negative rates one must also consider the costs of managing current accounts and deposits which in 2018 were 87 euros on behalf. So we can deduce from all that it is not advisable to keep the money under the mattress and on the current account, outside of the money that is used for daily expenses and for the unexpected, but you have to use your capital so that they are safe and that make.

Medium-long term investments

An investment that makes, at least from what history teaches us, is equity. However, we must have the availability to tie up our capital for a medium to long period of at least 10 years. Research has shown that investing a capital of 1,000 euros in the indexes of global stock markets today the resulting capital would be 2,154 euros, in the last 10 years even more than 2,241 euros. This may imply that despite the collapses, the intermediate fluctuations are amortized but over a period of decades. The capital would also have been protected with investments in the bond market and would also have had a growth in value. With an investment of 1,000 euros after 20 years there would be a capital of 2,127 euros while in the last 10 years they would have become 1,156.

But we must make it clear that the returns of the pass do not necessarily mean that we will have them in the future. But we must still get in the game and try to invest in order to increase capital, surely the risk factor is missing and instead the decision to passively keep the money stopped in a current or deposit account, where there is no risk of loss, but the certainty prevails. .

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