Where to invest money, in deposits or securities? - Interest rates, not favorable. Bonds, the only ones with higher returns
Choosing where to invest your money is not an easy task. To make the right choice, you need to analyze interest rates and calculate how much profit you will make on your investment. Due to the low interest rates, the profit from all types of deposits is not very high. The same is true for government securities, where the yields on treasury bills are at their lowest levels, but the profits from bonds appear to be higher.
Currently, the return on investment in 12-month treasury bills is very low. The results of government bond auctions show that for 12-month bonds, the weighted average yield, i.e. the annual interest that the bond holder will receive during its term until maturity, has been continuously declining since June. In the last auction held on October 14, the return earned on the invested money was at the lowest level of 2.54%.
The same trend is also observed for 6-month treasury bills.
Meanwhile, investing in long-term instruments such as bonds appears more favorable. The yield for 3-year and 5-year bonds has increased from auction to auction, reaching 3.8% and 4.3% respectively. This means that the profit from investing in this type of instrument is higher.
What about investing in deposits?
Deposits have always been the most preferred form of investing money by Albanians. The average interest rate for all types of deposits in lek of citizens was 1.58% in July. Compared to the first months of this year, the interests do not appear very favorable.
Interest rates for deposits with a term of over 2 years, which are also the most preferred type for storing savings by citizens, have fallen to 2.4%, while for deposits of up to 1 year or 2 years, interest rates increased in July.
Interest rates on euro deposits are even less favorable, also resulting in a continuous decline. According to data from the Bank of Albania, the average interest rate on euro savings fell to 1.18%.
On the other hand, the average interest rate for businesses' Lek savings has increased slightly to 2.37%, while for euro savings it has fallen to 1.17%.
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