The next December 31, 2021 The deadline for Peruvian workers to withdraw 100% of their the deposits of the CTS. This ‘liquidity window’ will be the last they will have to withdraw savings from conditional availability products. In this context, Jaime Aritio, Renta 4 SAB’s Deputy Manager of Business Development for Latin America, offers some advice to make a responsible use of this capital.
Savings or investment with CTS deposits
In this regard, Aritio points out that it is important to understand that the CTS is an emergency fund and as such should be avoided spending or investing in high-risk products.
“For this, you need to find a savings or investment product that meets two key characteristics: the first is high availability, that is, the possibility of withdrawing this capital from one day to the next if necessary. The second will be seek a return higher than inflation, but with low risk through conservative or moderate savings or investment products ”, he says.
Investment alternatives after withdrawing the CTS
“If the savings and investment products available in Peru are analyzed, taking into account these two qualities, it will be observed that traditional savings products such as term deposit do not comply with any of them. If you want to withdraw before one year, you will have to pay a penalty. It is important to highlight that the real profitability they offer is negative, since currently with an inflation of 5.6% deposits pay an average of 2.2% annually, which causes a 3.4% annual capital loss, ”adds Aritio.
Faced with this, he raises the alternative of investing in the stock market, since “the investment can be undone at any time during the trading session and the average return is 10% annualized.”
However, it highlights that this type of investment must be accompanied by a long-term vision to “ensure that the growth of the companies in which it is invested is captured regardless of the moment of the economic cycle.”
In relation to this, it recommends investing through mutual funds such as breakeven between availability, profitability and low risk.
“In this way, it will be possible to access mixed strategies that combine the security of deposits or bonds with the profitability of shares without sacrificing availability,” he concludes.
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