5 ways to multiply 500 more – eGospodarka.pl

More than 150,000 PLN to start – this is what an adult child can carry forward, whose parents will safely multiply the money they receive from the 500 plus program
– Open Finance estimates. Imposing an investment with a higher risk can yield a much higher return, though uncertain.

A call for grant applications for the 500+ and "Jumpstart" programs has been launched (300 PLN for a school layette). Thanks to them, parents' accounts will rise to about PLN 25 billion per year, or more than PLN 2 billion per month. Most of this money will be spent on child development or consumption, but it is certainly set aside for a "rainy day" or to help the child become self-sufficient or gain an education.

Open Finance advises how to multiply this money wisely and safely. In our estimates, we assume that money is invested for 18 years. For this, we assume that the family has such financial comfort that it is able to spend 500 PLN each month in the home budget and invest them.

1. The bank will protect, but more difficult for real profit

How to multiply money from the educational benefit? The simplest solution and at the same time the point of reference for other proposals is a bank deposit. The data provided by the NBP indicates that during the period from January 2005 to May 2018, it appears that the average interest rate on the quarterly deposit was 3.6%. Today, this rate of interest is only available in the case of the most attractive promotional investment offers, but it should be noted that if the Monetary Policy Council finally begins to take up interest rates, investment profits will start to rise.

It is not without reason that we take quarterly filings as a point of reference. In this category, banks usually have the best deals, and the average interest rate on annual deposits is generally lower.

Suppose parents regularly establish quarterly deposits for 18 years using 500+ benefits money. In total, during this time, with interest on the account of these parents, there may be 142,700 zlotys. zł. This amount includes the so-called "Belka Tax". This is a lot, but you must be aware that inflation will make that in 2036 the value of buying this money will be significantly lower than today. How many? For example, if prices rose at the rate of the Monetary Policy Council (2.5% per year), it would take about 18 PLN in 18 years to make the same purchases as today for 100 PLN. effect

? 142 700 2033 PLN would be enough for purchases like 106 000 today. This means that the regular establishment of bank deposits would allow the family to retain almost all the value of buying money from the 500+ program. It should be remembered that for 18 years (216 months) the amount of 108,000 zlotys can be credited to the account of the parent receiving the "single profit" – unless subsequent governments change or abandon more than 500 zlotys, per example. Bank deposits, however, allow us to combat the fact that inflation will gradually decrease with the purchase price of 500 PLN.

2. Wisła manufacturers will earn a lot

Higher profits could be made by parents who would not use the average deposit offer, but would regularly seek the best deposits and interest-bearing savings accounts . Today, the best offers available on the market allow you to earn 2.5% to 4%. This is clearly more than the market average (1.9%), but you should be aware that the higher the percentage, the more difficult it is to meet the requirements of promotional deposits.

It usually turns out that the most favorable offers are reserved by banks for new customers, new funds or account holders and payment cards that may already be payable. Therefore, it is necessary not only to know the offer in detail and, for example, to actively use additional products, but also to continuously monitor current promotions. A good solution is also to use each of the parents separately from the promotional deposits, and after finishing using the promotion, he closed all the products in the given institution. Most often after only 12 months, the bank will consider such a customer as new and will allow the use of other promotions.

Continuous research of the best offers is not completely impossible, but requires a lot of work and self-discipline. If, for 18 years, parents were going to play such an art, we can assume that thanks to that the interest rate on their savings could be 1 point. percent. above the market average. The result? Parents regularly establishing promotional deposits and adding up to 500 PLN per month, could save 154.6 thousand PLN for 18 years. PLN (after tax).

That means that in terms of money today, their savings would be about 115,000 PLN – of course, unless inflation does not occur. accelerates for 18 years against the goal of the MPC (2.5% per year). In this case, the promotional deposits would not only protect the value of the purchase of the children's education benefits against inflation, but also achieve a modest profit

3. A solid percentage of the minister in return for the benefit

If someone is looking for a solution that will absorb me, and almost as profitable and safe, then I should be interested in the offer special obligations for 500 plus program beneficiaries. Under this regime, people who receive a benefit from the municipality can buy bonds of six and twelve years. The first bear interest at 2.8% for the first 12 months, after which the profit on them will be determined by adding 1.75 points. percent. at the rate of inflation provided by the Central Statistical Office. Papers with maturities twice as long will give a profit of 3.2% the first year, then 2 points. percent. on inflation.

Fig. mast. releases

Potential investment results of PLN 500 per month for 18 years (after taxes)

The analysis assumes that the money is invested for 18 years

Click to go to the gallery (3)

Suppose then that the family will buy regularly these titles of higher interest (12 years) and that the long term inflation will fluctuate around 2.5% (target d & # 39; NBP inflation). The result? After 18 years of investment, the value of Treasury securities would be about 164.7 thousand. zł. If parents want to give this money to a child, they will have to sell tax documents. This means that you must pay taxes and early redemption fees (maximum PLN 2 per single bond). Thus, in total, about 151,900 of them would be credited to their account. gold. A result similar to the one that parents could perform on a regular basis by checking promotions in banks and regularly transferring capital between open and closed accounts. The advantage of holding money in banks, however, is the ability to quickly withdraw deposits – even on the same day. An investment in tax documents means a longer investment horizon. Although treasury bills can be sold before their due date, they can carry a commission (maximum PLN 2 per 100 PLN invested) and you have to wait several days before receiving the same. redemption money

4. Parkiet gives hope, but it carries the risk

The real likelihood can choose the stock market. Here, the forecast of investment results is even more difficult, and the result of the investment itself will depend on the economic situation, which can not be predicted in the prospect of 18 years.

However, let's do a simple calculation. Again – as in the case of deposits – pay attention to the data for the period from January 2005 to the most recent available, that is to say from early July 2018. Unfortunately, they are not promising . Why? The index of the largest Polish companies (WIG 20) recorded a modest value of 7.8%, which means an average growth of less than 0.6% per year. On average, the share prices of the largest companies of the Warsaw Stock Exchange have evolved on average over the period under review, although we have had to deal with large post-crisis increases and depreciations [19659024]. for sale, then the investor would not even notice the profits. However, there is a trap here. The increase in share price is not the only source of the investor's stock profit because you can still earn dividends or pre-emptive rights in shares. Given these benefits, we already have a more promising result of more than 86% over the entire period analyzed, or 4.7% per year (before tax). If such results were maintained for the next 18 years, parents depositing 500 PLN zlotys per month in their brokerage account would have an amount of 155,400 zlotys after that date. PLN after tax. It's almost the same as in the case of depositing money into a bank deposit or buying premium state bonds. The stock market is however very unpredictable. If the parents wanted to withdraw their capital at the time of the turbulence or crises, it could be that they have recovered less than half of their funds. On the other hand, at the height of the bull market, their wealth could easily be twice as high

5. Children? No credit or no money

The last financial solution that beneficiaries can use 500 more applies to people with a mortgage. Why? It turns out that families with children have the most loans. Eurostat data show that in 2016 only 4.5% of singles in Poland and 25.4% of families with one child had a mortgage.

So, if the parents have a mortgage, it is rational to spread the profits that they receive repayment of the debt. The reason is simple. In the vast majority of cases, the mortgage rate is higher than what you can earn on secured deposits or treasury bills.

Suppose the family has to pay 250,000 PLN (for an average amount, the marriage was indebted in 2017), and the debt itself is used for 30 years. In this case, the monthly loan payment is less than 1.3 thousand. PLN, because the average interest rate on a new mortgage is currently about 4.6% (APR according to the National Bank of Poland). If the bank did not charge a fee for the pre-payment of the loan, the family could freely spend PLN 500 per month for overpayment. Suppose then that the market conditions will remain unchanged, and that the family will spend 1.3 thousand PLN on the debt each month. PLN (it was the original down payment) plus 500 PLN of the educational benefit. The result? After 16 years and a month, he will be able to get rid of all the debt, saving nearly 110,000. PLN by interest. Without paying too much, the family would have to pay a total of 203 thousand zlotys for 30 years. interest, if he decided on monthly overpayments, this amount would have been reduced to 93.3 thousand. gold.

Bartosz Turek, Analyst