Central banks are reinforcing their message of maintaining favorable financial conditions in the near future, which does not imply that official interest rates cannot rise. In fact, in some cases this possibility is already being openly discussed, although there is unanimity that the level of interest rates in the near future will remain well below inflation, which is expected to remain higher and for longer than anticipated.
Saving is a deliberate and planned act. By doing so, we stop spending today to do so in the future, either because we have a specific consumption objective or we are anticipating future needs. In the latter case, we accumulate reserves with the aim of making them profitable. However, if this return is lower than inflation, savings lose purchasing power.
In Spain, more than 40% of household financial assets are in cash and deposits. We must consider that the alternative to deposits in terms of security and confidence is public debt, largely with negative interest rates. The rest of the distribution of Spanish household financial assets consists of equity holdings in companies (25% of the total), insurance and pension funds (16%), and holdings in investment funds (15%).
The investment fund segment was the one that increased its weight the most in Spanish investors’ portfolios during the past year. This is not surprising, as they fulfill the three principles on which saving is based: availability, consistency, and profitability. The key for investors is to design a fund portfolio suited to their risk profile. At this point, financial education is essential, as a guarantee of a reasoned analysis of the investment prior to decision-making, and having good professional advice whenever possible.
José Luis Martínez Campuzano, spokesperson for the Spanish Banking Association
