Bonds or saving account (1.9% p.a.)?

[joannsmith]

Hi,

I'm planning an investment to 60% stocks (VWCE) and 40% bonds. The bonds part is there to reduce risks/volatility.

In my country I have an option to have a saving account with 1.9% p.a. interest rate - after taxes. This may ofc change, but expect that this rate will stay at least for a year or so.

I was considering an EUR-hedged bonds ETF for that 40% for my portfolio. I don't know that much about bonds, but their yield are low and I don't see any signs this should change soon. They hardly reach that 1.9% p.a.

Do you think it's better to invest in bonds ETF or keep the money in saving account? Is there perhaps some advantage of bonds ETF that I'm overlooking?

Thanks!

 

[resjudicata]

@joannsmith A 1.9% savings account is a mega deal, where are you getting this and what conditions apply?

 

[nishan]

@resjudicata It may not be, depending on the currency. 1.9% on EUR would be an amazing deal, but on a much smaller currency it might not be

 

[joannsmith]

@nishan Indeed, it's not a EUR saving account, but a CZK saving account (that's my primary currency anyway).

 

[nishan]

@joannsmith I'm in CZ! Moneta do 2.5% on a savings account by the way

CZK is a very strong currency to be in at the moment thanks to the central bank. Not only do you get the interest, but there is an excellent chance of appreciation vs the EUR and USD. I'd say keep your Koruna and get a Moneta account.