How to subscribe savings certificates?

How to subscribe savings certificates?

The rise in Euribor rates has boosted the interest on savings certificates, which are already the best choice among guaranteed capital products. Linked to the 3-month Euribor, the rate for new subscriptions and capitalizations was set by the IGCP in October, nos 2,106%which means that, in net terms, the certificates already pay more than 1.5%. That is, much more than traditional term deposits.

And the Portuguese have not been indifferent to this increase: the stock total savings certificates reached, in August, the €13.9 billion, the highest since April 2011. The appetite for these products grew especially in the months of June, July and August, when investment in certificates increased by more than one billion euros.

We have gathered, in this article, the main information about savings certificates, and we explain what you should do if you want to subscribe.

Open a savings account

To subscribe to savings certificates, the first step is open a savings account at IGCP, to which the certificates will be associated. For that, just go to a CTT store, taking the following documents with you:

  • Form 701 completed account opening form
  • Identity card or citizen card or passport or residence permit in the case of foreigners with resident status in Portugal
  • Taxpayer card or citizen card
  • Proof of IBAN
  • proof of address
  • Proof of profession and employer

The savings account is assigned a number, which will then be reference to indicate in all movements. Associated with this will be your bank account, where payments will be made (redemptions, if any) or the final payment when the certificates expire.

Find out what can be holders of a private savings account of any nationality or age, as long as they have an identification document and taxpayer number. Minors will only be able to redeem the certificates by themselves before the age of 18, except minors aged 16 or overprovided that they prove their emancipation under the terms provided for in civil law.

Also read: Are Savings Certificates a good option again?

hand stacking coins on top of a table

Subscribe in store or online

Once the savings account opening process has been completed, you can subscribe to savings certificates (as well as Treasury certificates) in person, at a CTT store or at a Citizen Space, or via the internet. In store, you will have to indicate the number of the savings account where the certificates will be registered and, if you are subscribing to someone else’s account, fill in the form model 701-B.

If you prefer subscribe online, you can do it through the AforroNet system, just by signing up to the service in advance, registering your account and user number. On the website you will be able to make subscription requests, address changes and consultations with your certificate portfolio.

In savings certificates, each unit has a value of 1 euro, and the minimum investment is 100 euros and the maximum is 250 thousand euros.

How much will I pay?

Subscription, maintenance and withdrawal of savings certificates it doesn’t have any cost. will only be subject to IRS on interest and permanence premiums, which are paid already deducted from the tax. That is, before interest is added to savings, on a quarterly basis, the tax amount (28%) is withdrawn and delivered to the Finance Department. Thus, you do not have to declare to the IRS what you earn with the certificates.

Also read: Money sitting in the bank? Savings certificates already yield more than 1%

Why invest in savings certificates?

Savings certificates are currently the best alternative among products with capital guarantee. And this guarantee is given by the Portuguese State itself, as savings certificates are public debt instruments. This means that, by subscribing, you are, in practice, lending money to the State, which will reimburse your investment.

In this product, interest is calculated monthly based on the three-month Euribor average of the previous ten working days plus one percentage point, so it is a good way to benefit from the recent increase in these rates. At the moment, interest on certificates already exceeds 2% (in gross terms) and, taking into account the prospects of continued increase in Euribor rates, should reach 3.5% (maximum ceiling for interest on certificates) as early as next year. We are talking about a net return of more than 2.5%, much higher than that of any other guaranteed capital product.

On the other hand, savings certificates also allow you to benefit from the multiplier power of interest capitalization: On a quarterly basis, certificate holders receive interest that is added to the initial capital to generate even more interest. In addition, from the second year onwards, the base rate is added to a 0.5% permanence premium. From the 5th year, the permanence premium increases to 1%.

The term of the Series E Savings Certificates (series currently on the market) is 10 years but just can’t withdraw the money during the first three months. You can then pick it up (part or all) at any time and free of charge. If you don’t withdraw your savings beforehand, you will receive it, with the interest you have earned, 10 years later.

Also read: 5 safe investments to invest your money

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