Fixed term: After the rate increase, how much do you need to invest to earn $100,000 or $200,000?

In the midst of the sharp rise in prices soaring and driven by galloping inflation that exceeds 7%, (and which in March came close to 8%), On Thursday the Central Bank decided to raise the reference rate. That decision has an impact in the profit that allows to place fixed-term savings in local currency.

The monetary institution’s decision to raise the rate by 300 basis points now allows small savers, who immobilize your money for at least a month, a greater reward. Therefore, the new nominal annual rate (TNA) of traditional fixed term and LELIQ is fixed at 81%with a annual effective (TEA) of 119.1%which is equivalent to a effective monthly rate of 6.7%.

In this inflationary context, added to the run on the dollar in recent days, the blue started the week at $400 and is now at $432, and facing the government behind-the-scenes crisis, the proximity of After the election, investors try to protect their pesos and start reviewing options.

The most conservative ComeAS, fixed-term a good way to at least reduce losses which cause constant price increases, but without risking too much. Also, this is one of the alternatives where the money can be used in short periods: 30, 60 or 90 days.

How much do I need to deposit to earn $100,000 or $200,000 a month

According to BBVA banking simulators, a saver must invest between $1.5 and $3 million to make a profit of just over $100,000 or $200,000 in 30 days.

Taking the first example, i.e. after a year, in April 2024, the saver will receive $2,711,671.23. It will be livestock, AS, a total of $1,211,671.23. As long as the rate stays at this percentage and that amount is $1.5 million without compounding.

The best thing about this exercise is adding interest to the initial amount. If that $1.5 million leaves for a one-month period, interest earned it will be $103,191.78 (according to the test carried out with the BBVA simulator, which gives a rate above 6.7%). If the sum of $1,063,191.78 remains in the second month, the saver will earn approximately $110,289.38 over the next 30 days. That is, adding principal plus interest would make about $7,098 pesos more.

Taking the current annual percentage rate (adding principal plus interest), that initial $1.5 million will be $3,286,500. In 365 days the saver will have more than doubled his capital.

If the exercise is done with $3 million, the accounts are as follows: 30 days, the gain will be $206,383.56, i.e. at the end of the month the saver will have approximately $3,206,383.56. After a year, that initial investment will have grown to $5,430,000, or get $2.4 million more.

If interest is added to the initial capital After another 30 days, the amount will increase to $220,581.58, that is about $14,000 pesos more than the initial investment. And at the end of one year, the extra figure will be $3,573,000.

The cost of credit card refinancing

The rate hike also affects credit card financing. If the card is paid in full when the summary expires, the user will not see any change. But if the payment of consumption is advanced now it will be 3 points more expensive on Thursday.

The BCRA, which also regulates the rates charged by cards, provided that, in the event of payment of the minimum due date, the nominal rate goes to 80% per annum.

The total financial cost, with the new rate, becomes 147% per annum, depending on the conditions chosen to refinance the balance.

what about inflation

To know whether or not the fixed term will outpace the price increase, it is necessary to estimate how much future inflation will be. If we take into account today the economists’ projections for the month of April, the fixed term with the current rate (6.7% per month) still loses against the inflation estimated at 7% for the current month.

If instead, it is assumed that in April the cost of living would increase by 6.3%, according to the Survey of Market Expectations (REM) carried out by the BCRA itself, the opposite would happen. That is, fixed conditions would gain a few points relative to inflation. However, and after the latest events this week, for some private advisors the figure may be exceeded.

“Probably data for the month (April) have a higher increase because this week. You had the impact of learning about inflation in March (7.7%) and the blue leap issue of nearly 10% for the week. So I think inflation will be higher this week in terms of food. The one in May will also be higher,” Sebastián Menescaldi said when asked by Clarín.

NS