Returns never seen in the last 10 years for these stocks -proiezionidiborsa.it
Inflation above 10% in Italy sent bond yields skyrocketing. Some government bonds have reached interest rates they haven’t touched for 10 years. For those who want to earn quickly, here are which bonds to bet on safely without the risk of losses.
Just a year ago it would have been impossible for many to imagine that inflation would have reached its highest level in over 40 years after 12 months. There European Central Bank to stem the jump in prices, it has increased the cost of money several times. This choice inevitably has pushed up yields on all bonds. Even the yields of our government bonds have shot up, reaching levels not seen for years.
The European Central Bank-proiezionidiborsa.it
Beware of investing in these government bonds
The rise in yields drove down the prices of fixed rate securities. Ours too Multi-year Treasury bills suffered the same fate, with collapse of values sometimes even 10%. Anyone who has a BTP in their portfolio and will keep it until maturity will not suffer any loss. However, this security is not guaranteed to anyone who sells a security in their portfolio before repayment.
It seems likely that the ECB could further raise the cost of borrowing in the coming months, with a consequent new increase in yields. This scenario could lead to a further decrease in BTP prices, especially those with a remaining term of a few years. But, then, who has liquidity in their current account and wants to protect their savings from inflation, what should they do?
Returns never seen in the last 10 years for BOTs
The exponential growth of yields has revived virtually forgotten government bonds, Treasury bills, bots. In recent years, the yield on BOTs had even fallen below zero. In practice, those who invested in BOTs lost money. Today the scenario has totally changed and Treasury bills have caught up returns never seen in the last 10 years.
Let’s take some examples. Who bought at the time of this analysis the BOT with the further deadlinei.e. a December neighbor (ISIN: IT0005523854) would pay 97.2 cents. At this price the annual gross return is 3% about. Anyone wishing to bet on a closer deadline could bet on bots which will be refunded to July (ISIN: IT0005500027). With the quotation of 98.75 cents the yield would be of 2.39% gross per annum.
The yield would be 2.39% gross annually-proiezionidiborsa.it
Because betting on BOTs could be a winning choice
Focus on bots could be a strategy adopted by who wants to secure their money for a few months. The probable increase in the cost of money in the next ECB appointments would cause the prices of BTPs to fall further, especially those with a residual duration of a few years. So betting on BOTs maybe in six months could prove to be a winning strategy. In July, the saver could make different choices, or still remain on the sidelines by buying the BOT with a December maturity.
Naturally these are problems of those who already have capital to safeguard. But who doesn’t have savings? 2023 could be an opportunity to start putting away some money, perhaps without too much effort. In fact, by following the right tactic it’s not that difficult to save 3,500 euros in 12 months.
