Why is a Bond Portfolio better than directly buying Bonds or Treasury Bills?

Without a doubt, buying treasury bills has become popular in recent months due to the widespread increases in interest rates and, therefore, the returns offered by them.

Have you tried buying treasury bills? Or do you prefer to queue in front of the Bank of Spain?

Buying bonds directly can be a headache, with complicated interfaces, managing maturity dates that make your investments illiquid, and manual management of your investments.

Here we tell you 5 key advantages of why it may be better for you to hire a Bond Portfolio or a Savings Portfolio from inbestMe.

ConceptBond PortfolioSavings PortfolioDirect investment bonds or treasury bills
PurchasingEasy/digitalEasy/digitalIt can be complex
ManagementEasy, managedEasy, managedIt can be complex
DiversificationHighly diversifiedHighly diversifiedCan be very concentrated
LiquidityIn 5 daysIn 5 daysMay depend on expiration dates
TaxationVery efficient, transferability, tax efficientVery efficient, transferability, tax efficientIt is not tax efficient
Comparativa Cartera de Bonos – Cartera Ahorro – Comprar letras del tesoro
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1. It’s easier to hire

Contracting a Bond Portfolio or a Savings Portfolio can be done digitally in a few minutes. If you’ve tried to sign up for a treasury bill online, you’ve probably encountered a complicated interface. If you managed to get through it, you would still have to choose the right expiration, the right auction and wait for them to be awarded to you.

Contracting treasury bonds directly is not easy either. Buying and selling individual bonds often means dealing with outdated and unfriendly websites with high brokerage commissions in some cases. However, hiring a Bond Portfolio or a Savings Portfolio can be done digitally from your computer or mobile phone in a matter of minutes.

2. It is easier to manage

Regardless of the ease of the process, buying bonds or treasury bills outright means planning investments around arbitrary maturity dates, specific selling periods, and dealing with investment lows and highs.

Our Bond or Savings portfolios, based on index funds or ETFs, eliminate these complications. They become more practical and simple with recurring contributions and automatic rebalancing. At inbestMe, once you contract your portfolio and automate your contributions, you can not worry; We take care of everything with minimal costs. Basically, once the portfolio is contracted, there is no further management on your part. You go in autopilot mode.

3. Diversification

Our bond or savings portfolios use a variety of index funds or ETFs. This diversification helps reduce both the risk associated with interest rates and credit risk, without compromising the expected profitability. We offer a mix of low-risk bonds to achieve an optimal balance between return and risk.

4. Liquidity

Money market and bond funds and therefore our portfolios offer daily liquidity, and ETFs are listed like stocks, allowing intraday settlements. This ensures you obtain the returns of the bonds without worrying about maturity dates and without facing complex and cumbersome operations in buying, selling and reinvesting. In addition, you can withdraw your money without penalties, and in 5 business days you will have the money in your account.

5. Taxation when buying treasury bills or the Bond Portfolio

inbestMe’s bond or Savings portfolios, built with accumulation and transferable investment funds, are more tax efficient than the direct buying bonds, treasury bills, or even deposits, where the income is subject to automatic tax withholding. By investing in our bond portfolios, you benefit from compound interest, including generating returns on unearned taxes, thanks to tax deferral. Furthermore, if you decide to move money in the bond fund portfolio, you can transfer it to another portfolio taking advantage of the transferability.

In the bond ETF portfolios, we also use UCITS accumulation ETFs. Furthermore, in all ETF portfolios, clients have activated, by default, our tax harvest optimization, which seeks to generate tax losses offset by capital gains. It must be taken into account that this effect may be more limited in certain portfolios due to their lower variability.

Build your assets in the short, medium or long term at your own pace

We have strived to offer an innovative alternative to directly purchasing bonds. Our solution eliminates the inconveniences associated with directly purchasing bonds and purchasing treasury bills and makes saving and investing easier, helping you achieve your short-term goals.

Both the inbestMe Bond Portfolio and Savings Portfolio, fully automated, integrate perfectly with our diversified investment accounts, offering you a complete solution to achieve your long-term financial goals.

Remember that the variable Yield of the Savings Portfolio is 3.25% in Euros or 4.80% in dollars (August 2023), and these percentages are net, after all expenses. If you’re looking for a longer horizon for your savings, consider our recently relaunched Bond Portfolio. Despite greater volatility, the performance of the Savings Portfolio could increase by some points, especially when the interest rate curves normalize.

In our continuous search to help you build your wealth and plan your financial life in the short, medium and long term, we offer you multiple accounts adapted to your needs. Our wide range of wallets gives you a new way to optimize your money, simply and accessible with just a few clicks.

You can start today with a minimum investment of only €1,000.

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