What advantages does BTP Futura 2037 offer and when is it convenient compared to postal savings bonds?
The next BTP Futura 2037 is now on the launching pad. From tomorrow morning until 1pm on Friday 23, unless early closing, it will be possible to adhere to the placement of the new bond (ISIN code during the placement period: IT0005442089).
Let’s analyze the product here: what advantages does the BTP Futura 2037 offer and when is it convenient compared to postal savings bonds?
The similarities between BTP Futura 2037 and Postal savings bonds
Let’s first look at the most important elements in common between the two distinct product families.
The first of all refers to the degree of risk of the two products, which is practically very low. The BTP Futura is issued by the MEF while the Coupons are issued by Cassa Depositi e Prestiti (CDP) and distributed through the Italian Post Office. But CDP is in turn controlled by the Treasury, ie MEF. In both cases, therefore, there is a guarantee from the state.
A second feature of commonality refers to the subsidized tax regime at 12.50% on accrued interest income.
Let’s proceed with the analysis of the BTP Futura 2037: what advantages does it offer and when is it convenient compared to postal savings bonds? Another shared feature is the step-up coupon structure. In other words, an increasing trend in the interest rates offered as the holding period of the respective instruments increases.
Let’s clarify it better: the BTP Futura offers 4 distinct and increasing rates to each of the respective four-year periods. It starts from 0.75% in the first 4 years to reach 2% in the last four years (16 years in total).
For example, the BFP 3X4 lasts 12 years and offers an effective gross annual return of 0.10% at the end of the 3rd year. Then we move to 0.20% at the end of the 2nd, finally 0.30% and 0.50% at the end of the 9th and 12th years.
So, what advantages does the BTP Futura 2037 offer and when is it convenient compared to postal savings bonds?
Now let’s move on to the analysis of the elements that most distinguish the two types of products.
Beyond the rates recognized by the respective products, the timing with which those interests are recognized should be emphasized. This is true in the case of early sale of the product, ie before its natural expiry.
Good: in the case of postal savings certificates, the interests are recognized only at the end of the reference time window. That is, at the end of the three-year period in the case of the 3X4 voucher or of the four-year period in the case of the 4X4; and so on. Only the Ordinary Voucher enjoys greater flexibility in this regard. In the sense that, after the 1st year of purchase, interest is recognized every two months.
On the other hand, in the case of the BTP Futura, the coupon is six-monthly. Not only that, but in the event of a sale during its vesting period, the market price of the bond also includes the related accrued accrual.
In a nutshell it is a pro in favor of the BTP Futura and not of the Good.
The certainty of the invested capital
We close the discussion about the BTP Futura 2037, what advantages it offers and when it is convenient compared to postal savings bonds.
The second distinction will turn out to be a pro in favor of the Bonds and not the BTP Futura.
By exiting the investment before the expiry of the product, the BFP always recognize the investor 100% of the capital initially paid. For those looking a priori for absolute certainty and without any condition of the full return of what has been paid, the product lends itself to the purpose.
Conversely, the BTP Futura 2037 (but the same applies to all government bonds) if sold prematurely can give rise to three different cases. The first, that the bond is sold at the same purchase price: the operation would be neutral.
Or it may happen that you sell it at a higher or lower price than the one we bought it for. In the first case we will take home a capital gain, ie on the difference between the money invested and those collected at the time of the sale. The opposite will occur in the other case instead.
Finally, the last difference, the loyalty bonus: it is present only in the BTP Futura and not in the structure of the BFPs.
So here is the BTP Futura 2037: what advantages does it offer and when is it convenient compared to postal savings bonds. Finally, in the article referred to here in the link we illustrate the technical details concerning the neo-bond to be placed from tomorrow.