Faced with a steady decline in their income, Greek households because of the high inflation from one and commit interest rates in deposits on the other hand, which, in terms of forward rates, were stuck at 0.14% in September from 0.13% in July, when the first increase in interest rates from ECB. Thus, high inflation, which reached 9.8% in September, coupled with low interest rates over the past year, are rapidly eating into the purchasing power of money.

Low deposit rates are not a Greek phenomenon. Corresponding ones are also formed at low levels European interest rates, which, however, have recently been on an upward trend as European banks passed on some increases in interest rates to yield on deposits. The euro area’s weighted average household time deposit rate rose 21 basis points from August to 0.69% in September, while the corresponding corporate interest rate increased 54 basis points, according to ECB data released yesterday. points and amounted to 0.74%. Greek banks to oppose the fact that European banks applied negative interest rates on deposits of European citizens in the previous two years, a practice not followed by Greek banks at the time, keeping deposit interest rates in positive territory.

In any case, the discrepancy between interest rates on deposits and loans exploded the interest margin of Greek banks, which, according to the Central Bank, was up to 4.56% in September from 3.96% in August.

The prospects for higher returns are currently limited and are mainly focused on insurance-type programs, which, however, require careful selection, as they are either risky, as they are investments in investment-type products, or require money to be invested for long periods. time to secure the initial capital.

The insurance plans on the market, many of which are available through banks, are of the mutual fund type and do not guarantee guaranteed income or initial capital if the insured stays with the product for an extended period of time. Products of this type are usually linked to stock indices or baskets of stocks and can provide high returns but without commitment. They are divided into lump-sum products, where the fund is deposited only once, and periodic payment products, where the insured pays a fixed amount, such as monthly, quarterly or semi-annually.

The prospects for higher incomes are limited and are mainly related to insurance programs.

When choosing the appropriate insurance product, consideration should be given to the duration of the investment, the management costs that each product incurs, i.e. how much the insurance company actually invests, the flexibility to change the composition of investment options, and the reliability of the manager. In the event that the product guarantees part or all of the capital, the decisive factor is how long this guarantee is valid, i.e. after how many years the insured will return his initial capital and what happens if he “breaks down”. ” product earlier, i.e. from 10 years, which is the average minimum period of ownership of these products.

It is also important that some of these products come with life insurance, which makes them different from simple mutual funds, which are also an alternative option for those who want to invest some of their savings. Greek government issuance has also returned to the forefront of the alternatives, mostly through three- or six-month interest-bearing notes.

However, the annualized interest rate for the three-month interest rate was set at 1.79% in the latest release, and the six-month interest rate reached 2.03% in the last October issue. Real estate remains a solid choice for Greeks to invest their money in, which, despite rising prices in the past two years, remains high with yield expectations estimated at 4%-5%.

They dissipate

Research agrees that even a low inflation rate of 2% per year, combined with low interest rates, causes capital to depreciate by more than half over time. In the hypothetical example of a capital of 50,000 euros and a hypothetical inflation rate of 3%, it is calculated that the purchasing power of this amount decreases by 26% after 10 years and by 45% after 20 years. This means that for today’s 50,000 euros it will be possible to buy goods or services worth 37,200 euros in 10 years and only 27,684 euros in 20 years, respectively.