Stop losing money with capitalization

A lot of people believe that capitalization bonds are a "Chinese business." You propose to pay the bank some kind of savings and it competes for weekly or monthly cash.

losing money




 Vietnam Finance - A lot of people believe that capitalization bonds are a "Chinese business." You propose to pay the bank some kind of savings and it competes for weekly or monthly cash. If you do not win anything, you get all the money repaid back. It looks like a lovely proposition when it comes out of your manager's mouth, but there are some pitfalls that make it a lousy choice for your pocket.


When you pay for a capitalization bond, your money is divided into three parts.

A part is destined to the participation rate in the sweepstakes. This means that prize money does not come from the bank, but from the customers themselves. And, as you may have already completed, many people must lose so that few win.

The second part of the money covers the bank administration fee.

With these two slices removed, we finally get the money left over to generate profitability. Yes, gentlemen: the gains come from this small part, not the total amount applied. And it is at this moment that the capitalization title turns out to be a pineapple.

Contrary to that talk that a bond yields gains greater than savings - which is not impossible, but rare -, its yield merely restores the sum spent on administration fees and participation in raffles. Thus, the customer receives back the same amount invested or corrected for at least 20% of savings income.

Imagine that you have applied $ 1,000 in a title that lasts three years. At the end of this period, you can receive your inflation-adjusted "investment" or simply redeem the same initial sum. In the second situation, you lose money, considering that the $ 1,000 from three years ago does not have the same value today because of inflation.

Another thing your manager forgets to quote is related to the money bailout. Generally, banks require a grace period of 12 months so that the client can get their hands on their money. If you need the sum before the maturity of the security, you will be penalized and receive only part of the capital.

Is it on the overdraft or the rotary of the card and hopes to win in the capitalization draw to solve your life? Save yourself as much as you can! Not only are you losing money on the interest charged by the bank, but you are also failing to generate money from the bonds.

See more: Vietnam Investment in construction of Sa Pa and Lao Cai airports

"Ah, but what if I'm willing to take the risk and get along?" Let's slow it down. If it is difficult for you to make significant gains, you must pay a 20% Income Tax rate on income. And, at an even harder chance to cash in, the aliquot jumps to 25% over the premium.

Are you convinced of your bad business? Check out the rules of your title. Sometimes it's better to stop paying the capitalization bonds and have a small discount on top of what you've invested than to persist until maturity.

And if you want to "force" yourself to save a little every month, there is a much more advantageous alternative: the automatic application of the Treasury Direct. You can invest in Treasury bonds through your bank or a brokerage firm. And just schedule an automatic application for the beginning of each month. It's easy, but if you have difficulties, ask for the help of your manager. The advantages will be numerous: your money will yield much more, the discount of rates will be lower and you can withdraw your money at the moment you wish. - Vietnam News

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Breaking Vietnam news | Vietnam's #1 News Site | Viet-News.com: Stop losing money with capitalization
Stop losing money with capitalization
A lot of people believe that capitalization bonds are a "Chinese business." You propose to pay the bank some kind of savings and it competes for weekly or monthly cash.
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