The Home Savings is a simple, transparent and perfectly regulated construction. Everyone gets the ‘same’ entry: a 30 percent government contribution to their deposited money, up to a maximum of 72,000 forints per year. But yields are different for each construction – why?
We do not win with the long version
There is no continuity: the difference in yield between different contracts depends on the maturity. But it is worth stepping back and specifying: what is the return on savings?
Yield is the increase in capital received as a result of investments; they are given in percentage form to make it clear. The gross version is the income before taxes and expenses, the net return – which is the case here – is what goes into our pockets.
For Good Finance, if you enter into a short-term contract, that is, 4 years, you will earn quite a substantial return. However, if the maturity is long, our investment will no longer be competitive. The secret to this is simple: our investment, that is, the money in it – which we cannot touch but the bank does – is increasing, while the annual state subsidy remains unchanged, up to a maximum of HUF 72,000.
Compared to a $ 240,000 item, the result is a whopping $ 72,000 (in Year 1), but compared to $ 2,400,000, it’s only a 3 percent increase (in Year 10).
That is, in Good Finance we have more than 2 million forints, and that’s just what we gain in the last year if we make a 10-year plan – which means the profit for the last year is very, very modest.
Support is limited, no upward trend
The reason for all of this is that there is no increase in government credit with more savings in it. So, in fact, we are best served by running several short, 4-year constructions one after the other.
In spite of the many constraints
It is worth considering the other aspects well. For Good Finance, the opening fee is a very big expense, and you should look at the offers to get the best deal on the contract. Let’s also keep in mind that due to quicker disbursements, we will be able to get more money from more financial institutions as of July 2017.