Are Savings Certificates Still a Good Investment? – Executive Summary

Savings certificates have faced a difficult scenario in recent months, with redemptions exceeding new subscriptions. The base interest rate remains at 2.5%, but the Portuguese interest has fallen significantly.

The Series F savings certificates, launched in June 2023, have underperformed expectations. Since November, redemptions have outpaced new subscriptions, leading to a steady decline in the amount invested. In June last year, Series E offered a total base interest rate of 3.5%, attracting more investors due to the high Euribor rate and putting pressure on banks to raise interest rates.

However, after pressure from the banking sector, the government introduced the less attractive Series F, which led to a decline in subscriptions. Currently, the base rate of 2.5% provides a net return of 2% per annum, which is lower than the inflation rate estimated by the Bank of Portugal for this year, which is 2.4%.

For those with older series of savings certificates, the recommendation is to keep the investments. These series offer higher returns than the best term deposits currently available. For example, Series A and part of Series B offer a net 4.2%, while Series C offers a total of 6.1%.

Poupança Valor Treasury Certificates, launched in September 2021, have also seen a significant drop in applications. With fixed annual interest rates ranging from 0.5% to 1.2% net, these products have lost their appeal compared to other investment options. In April, the total amount invested in Treasury Certificates was €10.5 billion, a sharp drop from €17.8 billion in September 2021.

In April, DECO PROteste presented a list of 10 measures to encourage savings in Portugal. The organization believes that state-provided savings products should offer more attractive returns, according to the risks and liquidity that each person bears. DECO PROteste says that savings certificates, since they are more liquid, should yield lower returns than Treasury Savings Value Certificates.

Furthermore, DECO PROteste believes that government savings products can play a crucial role in household saving behavior and act as a competition, encouraging banks to offer more competitive products to consumers.