Buying Bond (Certificados de Aforro) in Portugal: Easy Guide
Bond Certificates (Certificados de Aforro) offer a safe and reliable way to grow your savings. They provide guaranteed returns, with interest calculated quarterly and added to your savings. These certificates are easy to subscribe to and redeem, with no hidden fees or charges.
Table of Contents
- Overview of Bond Certificates (Certificados de Aforro)
- How Bond Certificates Work
- Investment Requirements
- Interest Rates and Loyalty Premiums
- Safety and Security
- Availability of Funds
- Example: How to Buy Bond Certificates (Certificados de Aforro) in Portugal
- Frequently Asked Questions
Overview of Bond Certificates (Certificados de Aforro)
Bond Certificates (Certificados de Aforro), particularly the Series F, are public debt instruments offered by the Portuguese government. They allow individuals to lend money to the state in exchange for a guaranteed return. With a minimum investment of just €10 and a straightforward process for both subscription and redemption, they are an attractive option for anyone looking to secure their savings.
How Bond Certificates (Certificados de Aforro) Work
Interest on Savings Certificates is calculated every three months and automatically added to your savings. This ensures that your investment grows consistently through compound interest.
Quarterly Interest Calculation
Interest is calculated quarterly, ensuring that your savings grow steadily. The interest rate is composed of a base rate plus a loyalty premium, which increases over time to reward long-term investors.
Investment Requirements
You can buy Bond Certificates (Certificados de Aforro) in Portugal with a minimum investment of €10 and a maximum of €50,000 per Savings Account. To open a Savings Account, the initial minimum amount is €100.
Initial and Maximum Investment
- Minimum Investment per Certificate: €10
- Initial Minimum Investment for Savings Account: €100
- Maximum Investment per Savings Account: €50,000
Interest Rates and Loyalty Premiums
The interest rate on Bond Certificates (Certificados de Aforro) consists of a base rate and a loyalty premium, which increases the longer you hold the certificates.
Base Rate
The base rate is determined monthly, based on the average three-month Euribor observed over the last ten business days before the calculation. The base rate cannot exceed 2.5% or fall below 0%.
Loyalty Premiums
The loyalty premium is added to the base rate from the second year onward, increasing the return on your investment over time:
- 2nd to 5th Year: +0.25%
- 6th to 9th Year: +0.50%
- 10th and 11th Years: +1.00%
- 12th and 13th Years: +1.50%
- 14th and 15th Years: +1.75%
Automatic Capitalization
Interest is automatically capitalized every three months, meaning the interest you earn is reinvested to generate more interest, boosting your overall returns.
Safety and Security
Bond Certificates (Certificados de Aforro) are considered a safe investment because they are backed by the Portuguese government. This means that your capital is guaranteed, and you are assured of receiving your investment back along with the accrued interest.
Government-Backed Security
By investing in Savings Certificates, you are essentially lending money to the Portuguese government, which guarantees the return of your principal and the interest earned.
Availability of Funds
One of the key benefits of Bond Certificates (Certificados de Aforro) is the high availability of funds. You can redeem your investment after the first three months without any penalties or charges.
Early Redemption
- Redeemable After 3 Months: You can withdraw your savings anytime after the initial three-month period.
- No Charges: Whether you redeem part or all of your investment, there are no penalties or fees.
Long-Term Investment
If you choose not to redeem your certificates early, you will receive the total investment plus interest at the end of the 15-year term.
Example: How to Buy Bond Certificates (Certificados de Aforro) in Portugal
To illustrate the process, let’s consider an example of how to buy Bond Certificates (Certificados de Aforro) Certificates in Portugal.
Scenario: João’s Investment
João decides to buy Bond Certificates (Certificados de Aforro) in Portugal to secure his savings and earn a steady return. He follows these steps:
- Determine Investment Amount: João decides to invest €5,000 in Savings Certificates.
- Open a Savings Account: João opens a Savings Account with an initial deposit of €100.
- Buy Savings Certificates: João buys Savings Certificates worth €5,000.
- Interest Calculation: Every three months, interest is calculated and added to João’s account.
- Loyalty Premiums: From the second year, João’s certificates start earning a loyalty premium, which increases over time.
- Redeem or Hold: João can choose to redeem his certificates anytime after three months or hold them until maturity to maximize his returns.
Benefits for João
- Guaranteed Returns: João’s investment is secure and guaranteed by the Portuguese government.
- Compound Interest: João benefits from automatic capitalization of interest every three months.
- Flexible Redemption: João can access his funds anytime after three months without any charges.
Profitability Simulation
Period | Capital at the beginning of the period(1) | Gross Nominal Annual Rate | Net Interest(2) | Capital + Net interest at the end of the period | Gross Effective Interest Rate(2) | |||
---|---|---|---|---|---|---|---|---|
Base Rate | Prize | Final Fee | ||||||
Year 1 | Q1 | €5.000,00 | 2,50% | 0,00% | 2,50% | €22,50 | €5.022,50 | 2,52% |
Q2 | €5.022,50 | 2,50% | 0,00% | 2,50% | €22,60 | €5,045.10 | ||
Q3 | €5,045.10 | 2,50% | 0,00% | 2,50% | €22,70 | €5.067,80 | ||
Q4 | €5.067,80 | 2,50% | 0,00% | 2,50% | €22,81 | €5,090.61 | ||
Year 2 | Q1 | €5,090.61 | 2,50% | 0,25% | 2,75% | €25,20 | €5,115.81 | 2,64% |
Q2 | €5,115.81 | 2,50% | 0,25% | 2,75% | €25,32 | €5,141.13 | ||
Q3 | €5,141.13 | 2,50% | 0,25% | 2,75% | €25,45 | €5.166,58 | ||
Q4 | €5.166,58 | 2,50% | 0,25% | 2,75% | €25.57 | €5.192,15 | ||
Year 3 | Q1 | €5.192,15 | 2,50% | 0,25% | 2,75% | €25,70 | €5,217.86 | 2,69% |
Q2 | €5,217.86 | 2,50% | 0,25% | 2,75% | €25.83 | €5,243.68 | ||
Q3 | €5,243.68 | 2,50% | 0,25% | 2,75% | €25,96 | €5,269.64 | ||
Q4 | €5,269.64 | 2,50% | 0,25% | 2,75% | €26,08 | €5,295.72 | ||
Year 4 | Q1 | €5,295.72 | 2,50% | 0,25% | 2,75% | €26.21 | €5,321.94 | 2,71% |
Q2 | €5,321.94 | 2,50% | 0,25% | 2,75% | €26,34 | €5,348.28 | ||
Q3 | €5,348.28 | 2,50% | 0,25% | 2,75% | €26.47 | €5,374.76 | ||
Q4 | €5,374.76 | 2,50% | 0,25% | 2,75% | €26.61 | €5,401.36 | ||
Year 5 | Q1 | €5,401.36 | 2,50% | 0,25% | 2,75% | €26.74 | €5,428.10 | 2,72% |
Q2 | €5,428.10 | 2,50% | 0,25% | 2,75% | €26.87 | €5.454,97 | ||
Q3 | €5.454,97 | 2,50% | 0,25% | 2,75% | €27,00 | €5,481.97 | ||
Q4 | €5,481.97 | 2,50% | 0,25% | 2,75% | €27.14 | €5,509.10 | ||
Year 6 | Q1 | €5,509.10 | 2,50% | 0,50% | 3,00% | €29,75 | €5,538.85 | 2,77% |
Q2 | €5,538.85 | 2,50% | 0,50% | 3,00% | €29.91 | €5,568.76 | ||
Q3 | €5,568.76 | 2,50% | 0,50% | 3,00% | €30.07 | €5,598.84 | ||
Q4 | €5,598.84 | 2,50% | 0,50% | 3,00% | €30.23 | €5.629,07 | ||
Year 7 | Q1 | €5.629,07 | 2,50% | 0,50% | 3,00% | €30,40 | €5,659.47 | 2,81% |
Q2 | €5,659.47 | 2,50% | 0,50% | 3,00% | €30.56 | €5,690.03 | ||
Q3 | €5,690.03 | 2,50% | 0,50% | 3,00% | €30.73 | €5,720.75 | ||
Q4 | €5,720.75 | 2,50% | 0,50% | 3,00% | €30.89 | €5,751.65 | ||
Grade 8 | Q1 | €5,751.65 | 2,50% | 0,50% | 3,00% | €31.06 | €5.782,70 | 2,83% |
Q2 | €5.782,70 | 2,50% | 0,50% | 3,00% | €31.23 | €5,813.93 | ||
Q3 | €5,813.93 | 2,50% | 0,50% | 3,00% | €31.40 | €5,845.33 | ||
Q4 | €5,845.33 | 2,50% | 0,50% | 3,00% | €31.56 | €5,876.89 | ||
9th Grade | Q1 | €5,876.89 | 2,50% | 0,50% | 3,00% | €31,74 | €5,908.63 | 2,86% |
Q2 | €5,908.63 | 2,50% | 0,50% | 3,00% | €31.91 | €5,940.53 | ||
Q3 | €5,940.53 | 2,50% | 0,50% | 3,00% | €32.08 | €5,972.61 | ||
Q4 | €5,972.61 | 2,50% | 0,50% | 3,00% | €32,25 | €6.004,86 | ||
Year 10 | Q1 | €6.004,86 | 2,50% | 1,00% | 3,50% | €37.83 | €6.042,69 | 2,92% |
Q2 | €6.042,69 | 2,50% | 1,00% | 3,50% | €38.07 | €6,080.76 | ||
Q3 | €6,080.76 | 2,50% | 1,00% | 3,50% | €38,31 | €6,119.07 | ||
Q4 | €6,119.07 | 2,50% | 1,00% | 3,50% | €38,55 | €6,157.62 | ||
Year 11 | Q1 | €6,157.62 | 2,50% | 1,00% | 3,50% | €38,79 | €6,196.42 | 2,98% |
Q2 | €6,196.42 | 2,50% | 1,00% | 3,50% | €39,04 | €6,235.45 | ||
Q3 | €6,235.45 | 2,50% | 1,00% | 3,50% | €39,28 | €6,274.74 | ||
Q4 | €6,274.74 | 2,50% | 1,00% | 3,50% | €39.53 | €6,314.27 | ||
Year 12 | Q1 | €6,314.27 | 2,50% | 1,50% | 4,00% | €45,46 | €6,359.73 | 3,07% |
Q2 | €6,359.73 | 2,50% | 1,50% | 4,00% | €45,79 | €6,405.52 | ||
Q3 | €6,405.52 | 2,50% | 1,50% | 4,00% | €46,12 | €6,451.64 | ||
Q4 | €6,451.64 | 2,50% | 1,50% | 4,00% | €46,45 | €6,498.09 | ||
Year 13 | Q1 | €6,498.09 | 2,50% | 1,50% | 4,00% | €46,79 | €6,544.88 | 3,14% |
Q2 | €6,544.88 | 2,50% | 1,50% | 4,00% | €47,12 | €6,592.00 | ||
Q3 | €6,592.00 | 2,50% | 1,50% | 4,00% | €47,46 | €6,639.46 | ||
Q4 | €6,639.46 | 2,50% | 1,50% | 4,00% | €47,80 | €6,687.27 | ||
Year 14 | Q1 | €6,687.27 | 2,50% | 1,75% | 4,25% | €51,16 | €6,738.42 | 3,22% |
Q2 | €6,738.42 | 2,50% | 1,75% | 4,25% | €51,55 | €6,789.97 | ||
Q3 | €6,789.97 | 2,50% | 1,75% | 4,25% | €51,94 | €6,841.92 | ||
Q4 | €6,841.92 | 2,50% | 1,75% | 4,25% | €52.34 | €6,894.26 | ||
Year 15 | Q1 | €6,894.26 | 2,50% | 1,75% | 4,25% | €52,74 | €6.947,00 | 3,30% |
Q2 | €6.947,00 | 2,50% | 1,75% | 4,25% | €53.14 | €7,000.14 | ||
Q3 | €7,000.14 | 2,50% | 1,75% | 4,25% | €53,55 | €7,053.69 | ||
Q4 | €7,053.69 | 2,50% | 1,75% | 4,25% | €53,96 | €7,107.65 |
Notes:
- Saving Certificates Series: F
- Simulation Date: 26-05-2024
- Number of Units Invested: 5000
- Amount invested: €5.000,00
- This simulation assumes that the 3-month Euribor rate remains constant throughout the investment period.
- The period of permanence used is the one defined in the Technical Data Sheet of the product to which it relates.
- The gross rate of return is used exclusively to calculate the result of this simulation and is not a guarantee of future profitability.
- Interest rates are annual. Income (interest) is net and subject to the IRS rate in force as of today.
Simulation in current market conditions. It does not dispense with the consultation of the information available in any CTT Store
Simulation link: Financial Solutions & Products | Savings Certificates (ctt.pt)
Frequently Asked Questions
What are the payment methods for subscribing to Bonds Certificates?
You can buy Bond Certificates (Certificados de Aforro) in Portugal using various payment methods, including Multibanco, bank transfer, cheque, or cash. Note that cash subscriptions are limited to €3,000.
Do I have to pay taxes on the interest earned?
Yes, you will pay IRS on the interest and loyalty premiums earned from Savings Certificates. The tax is withheld at the source, so you do not need to declare it in your IRS returns.
Are there any other costs associated with Bonds Certificates?
No, there are no subscription, maintenance, or redemption fees for Savings Certificates.
How do I receive my money?
Whether you redeem your certificates early or wait until the end of the 15-year term, the money is transferred to the bank account associated with your Savings Account.
Can I buy Bond Certificates (Certificados de Aforro) for someone else?
Yes, you can buy Savings Certificates in Portugal for someone else, but the certificates must be registered in their name. All required documentation and identification must be provided at the time of subscription.
How do loyalty premiums work?
Loyalty premiums are added to the base rate from the second year onward, increasing the effective interest rate over time. This incentivizes long-term investment in Savings Certificates.
What happens if I do not redeem my certificates before maturity?
If you do not redeem your certificates before the 15-year term, you will receive the total investment plus all accrued interest at the end of the term.
How can I buy Bond Certificates (Certificados de Aforro) in Portugal?
To buy Savings Certificates in Portugal, visit a CTT store or contact the Agency for Treasury and Public Debt Management (IGCP). You can also schedule an appointment online or call the customer service line for assistance.
Is there a risk of losing my investment?
No, there is no risk of losing your investment as Bond Certificates (Certificados de Aforro) are backed by the Portuguese government, ensuring that your principal and interest are guaranteed.
Can I buy multiple Bond Certificates (Certificados de Aforro)?
Yes, you can buy multiple Savings Certificates, but the total investment per Savings Account cannot exceed €50,000.
In conclusion, Bond Certificates (Certificados de Aforro) offer a secure and flexible way to grow your savings with the backing of the Portuguese government. Whether you are looking for a short-term investment with the option for early redemption or a long-term investment to maximize returns, buying Bond Certificates in Portugal is a sound financial decision. With guaranteed returns, automatic capitalization of interest, and no hidden fees, Bond Certificates provide a reliable means to achieve your savings goals.
Source: Certificados de aforro (ctt.pt)
Disclaimer: This post is for educational purposes only and reflects our understanding of the topic. Please seek professional advice before making any decision.