What is the fixed term that ensures to beat inflation and lets the silver out ahead of time

The common 30-day fixed term yielded 6.1% in March, but inflation ended up being 7.7%. In April, that popular investment gave a gain of 6.4%, which again lagged behind a price index that jumped 8.4%. In both cases, the invested silver lost purchasing power.

What will happen, meanwhile, to the saver who began May by making a traditional fixed term, tempted by the nominal annual rate (TNA) that the Central Bank had just raised to 91%? Most likely, you will suffer the same (bad) fate.

And, come on the 31st, they will return the pesos he deposited plus 7.5% of the amount, while now economists – after correcting their calculations again – expect this month to close with inflation of 9% or more.

Such a price index, increasingly close to 10% per month, would end up defeating even the new TNA of 97% announced by the Government over the weekend, and which would yield an effective gain of 8% in 30 days. How to shelter the weights in this scenario?

As the economy entered a process of highly unpredictable price increases, which month after month have been exceeding forecasts, in the eyes of specialists, a different type of fixed term that very few people know and take advantage of regained attractiveness.

It is a fixed term that, as the main advantage, is not governed only by a preset interest rate, but guarantees the depositor a return higher than inflation, no matter how much it ends up being.

The other point in favor, very relevant in the midst of the current uncertainty, is that silver can be withdrawn early if necessary. It is not immobilized until the end.

The Central Bank was raising the rate of the common fixed term, but inflation always ran faster. Photo: Juano Tesone.

What are the only fixed deadlines that today claim to beat inflation and how do they work?

The fixed terms that effectively "shield" the purchasing power of the pesos and allow early withdrawals are those that work with the system of Purchasing Value Units, better known as "UVA fixed terms". And within this category, you have to look at the "pre-cancelable" variety.

At the beginning of this investment, the pesos are converted at the price of the day in Purchasing Value Units, a kind of "anti-inflation" currency whose value is adjusted daily according to the CER coefficient, at the same rate as the INDEC inflation index. The daily value of the UVA can be consulted on the BCRA website.

With this modality the minimum term is 90 days, instead of 30. And at the end of that period the UVA are converted back to pesos at the price of the moment, which as long as there is inflation will always be higher than the initial one.

How much higher? Enough to compensate for the price rises of the period and that silver has not lost purchasing power.

The value of the UVA, for example, increased 21.2% in the last three months, and also updated the money of who made for example a deposit in UVA on February 14 for 90 days, until this May 15. If you put in $10,000, it became $12,118.

But in addition, the bank assures the saver a minimum real profit, since above the UVA adjustment it adds a TNA of 1%, which represents an extra $ 246 for every $ 10,000 invested to 90 days.

Thus, in the example, with the UVA fixed term, a final gain of 23.6% was obtained during the last quarter, compared to 19.9% that would have given a common fixed term in the same period.

With the UVA modality, the amount invested is withdrawn adjusted for inflation and with a plus. Photo: AFP.

UVA fixed terms: under what conditions can they be pre-cancelled and at what cost?

In the pre-cancellable UVA fixed terms, which must be offered obligatorily by all banks, the investment will yield as indicated as long as the pesos are left for at least 90 days.

If the saver suddenly needs to take his money, from the30th day he can ask for it to be returned. But in that case, the fixed term will have yielded as if it had been done in the traditional way, some points less than the current one.

For example, when a common fixed term yielded 91% per year, a pre-cancelled UVA gave 86.1%.

The advice of an economist: in the face of indomitable inflation, go "fully" to the UVA

"Our projection is that inflation in May will be closer to 9% than 8%, and that it will not moderate in the remainder of the year," Santiago Manoukian, head of Research at the Ecolatina consultancy, told Clarín.

"We are seeing not only rising inflation, but also unstable inflation. With chances that it will continue to accelerate and that the Central Bank will continue to run behind this dynamic with the interest rate, "adds the economist.

Therefore, today it recommends savers that, in order to "sleep more peacefully" and protect their pesos from inflation, they turn "fully to the UBA fixed term", an option still very little used (less than 3% of fixed-term deposits are UVA).

What is the prospect now, however, of a common fixed deadline? Manoukian replies: "If your rate now rises to 8% per month, it will still be below inflation; or eventually, at best, it could tie it. With a high risk of being surprised by the refusal, as happened in the last three months."

The common fixed term will now pay 8% per month, but prices in stores could rise faster than that. Photo: Boomberg.

Step by step, how to set up a pre-cancellable UVA fixed term?

To make the investment, simply look for the option in the home banking or mobile banking platform of each entity. The steps, in general, are:

1st. Enter the "Investments" menu and choose the option to constitute a fixed term.

2nd. When you check the fixed term type, select the option "pre-cancelable UVA fixed term".

3°. Enter the amount to invest and the term, which must be at least 90 days.

4°. Select from which account you want the pesos to be debited (in case you have more than one).

5°. By confirming all the data, the deposit is made and you can download the receipt.

When the deadline is met, the initial capital and profits will be automatically credited to the same savings or checking account.

How is the early cancellation done and how long does it take to recover the money?

The pre-cancellation can be processed by different means, once at least 30 days have elapsed since the deposit was made.

To order it, the most practical thing can be to look for the option in the app or in home banking, but you can also go to a branch or call by phone.

Once the request is received, the entity takes up to five business days to process it and return the funds with the corresponding interest.

MDG

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