Overnight, deposit rates were abruptly lowered.
On December 22, the five major state-owned banks of the Ministry of Industry and Agriculture, China and China issued an announcement that the interest rate on fixed deposits of 1 year and below will be reduced by 01 percentage point;The interest rate on fixed deposits of more than 1 year will be reduced by 02 percentage points and above.
According to Bai Nian's statistics, in less than 3 years, this is the sixth time that the deposit rate has been reduced. The dates were July '21, April and August '22, June, September and December '23.
Three years ago, fixed deposit products with interest rates of more than 3% were widely available, but today they are almost impossible to see.
Especially in the past year, the frequency of deposit interest rate cuts has been increasing, and the era of "low interest rates" is accelerating towards us.
As ordinary people, we are most concerned about 2 issues:
One is what logic is hidden behind the frequent interest rate cuts on commercial bank deposits?Will deposit rates fall rapidly in 2024?
Second, savings are the most important wealth storage tool for ordinary families. When the yield on deposits is getting lower and lower, how can we protect our wealth?
Today, when the deposit rate is lowered again, Bai Nian will give everyone advice.
1. Why should the deposit interest rate be lowered?
In Bai Nian's view, there are no more than two reasons behind this deposit interest rate cut:
One is at the macro level, the economy has already shown a "quasi-deflationary" signal, and interest rate cuts are necessary to stabilize the economy.
Regarding China's current economic situation, Bai Nian can be summarized as 8 big characters "oversupply and insufficient demand" - which has a deep-rooted relationship with the fact that local governments have always paid too much attention to supply-side capacity investment and despised demand-side consumption stimulus.
Of course, telling the story of China's economic development model is not the focus of Bai Nian today.
It's just this pattern that results in two ways.
First, on the supply side, China's capacity is always overcapacity.
In 2014 and 15, we had overcapacity in traditional industries such as steel and coal. Today, it is emerging industries such as photovoltaics and new energy vehicles, with low-end overcapacity.
The just-concluded ** economic work conference also pointed out this problem.
Second, on the demand side, the Chinese people have long despised consumption due to insufficient welfare protection. It's hard to buy a house, and I can't wait to invest in it.
However, as the real estate industry enters a "new cycle", the traditional means of stimulating consumption by "encouraging the purchase of houses" has also failed.
So in the current Chinese economy, we lack an effective means to stimulate the economy. If the pattern of "oversupply" is maintained, it will cause a long-term slump in China's inflation.
According to the National Bureau of Statistics, China's CPI grew by 05%, PPI negative growth of 3 year-on-year0%, a "quasi-deflationary" pattern has emerged.
Even in the past three years, in the face of a global environment of high inflation, we have still walked out of a downward inflation curve, which has surprised overseas observers.
China's CPI is much lower than overseas.
If the inflation level is too low, the "real interest rate" (nominal interest rate - inflation) faced by the real economy and enterprises will be high, which is not conducive to economic development.
At this time, reducing all funds** and financing costs, including deposit and loan interest rates, is a necessary measure to stabilize the economy.
In January 2024, the lending rate (LPR)** will also be lowered across the board.
Lowering the deposit interest rate during this period may affect the investment income of the people, but it is also a helpless move to take the overall situation into account.
Looking ahead to 2024, as long as the pattern of "oversupply and insufficient demand" in China's economy does not change, the pace of interest rate cuts will not stop.
In particular, we should also consider that in 2024, the Fed will also start a cycle of interest rate cuts, and the pressure on the depreciation of the RMB will ease. There is likely to be more room for interest rate cuts next year, at a faster pace.
The second reason for the deposit rate cut is at the industry level.
In 2024, the reform of the financial industry is about to begin, and the interest on deposits, as an important part of the income of the financial industry, needs to be transferred to the real economy.
Regarding the reform of the financial industry, Bai Nian published an article last month, and if you are interested, you can follow me and watch it back.
One of the important conclusions is that the high-level meeting pointed out that in the future, the added value of China's financial industry (employee income + pre-tax profit) needs to be benchmarked against the average level of OECD and reduce the proportion of China's GDP.
This means that corporate profits and employee incomes in China's financial sector as a whole will stop growing in the next 10 years.
At present, under the guidelines of the high-level, major financial institutions are taking out profits and contributing to the real economy.
For example, according to the statistics of the central bank, in September 2023, the net interest margin of Chinese commercial banks was 174%, the lowest value ever.
However, financial institutions are also enterprises, and they also need to maintain reasonable profits, resist business risks, and pay taxes and taxes.
What should I do if the profit can't be suppressed?Then reduce costs even further.
On the cost side, interest on deposits is a key component of the cost of capital. Therefore, lowering the deposit interest rate is also in line with the general policy of financial institutions to "reduce costs and increase efficiency".
Looking ahead, as the reform of the financial industry is fully rolled out in 2024, the pressure on financial institutions to make profits will increase.
Lowering deposit interest rates, as an important means of "reducing costs and increasing efficiency", it is entirely possible to continue to implement them, and it is even possible to increase them.
So on the whole, whether from the macro level or from the industry level, 2024 is still a "big year for interest rate cuts".
Then a new question is in front of us ordinary people:
Deposit rates are getting lower and lower, what should we do?
Second, how do ordinary people deal with deposit interest rate cuts?
Here, Bai Nian will give you 3 tricks:
The first move, for any investment products with locked interest rates such as fixed deposits and pension insurance, we"Buy early, buy long".
As Bai Nian mentioned just now, the long-term decline in China's interest rates is almost a foregone conclusion.
In this pattern, if we need to make a deposit, if the money is not touched for a period of time, it is recommended to deposit it as soon as possible.
Even if the deposit rate has just been lowered, it is not too late to save. After all, according to the rhythm of "3 interest rate cuts in 1 year" in 2023, you may not be able to guarantee that in a few months, the interest rate will be lowered again.
At the same time, we try to save for the long term.
On the one hand, long-term deposits inherently have higher interest rates than short-term deposits.
On the other hand, the interest rate is locked in for the duration of the deposit. For example, if I buy a 5-year fixed deposit, even if the interest rate falls in the next year, the interest rate on my deposit will still be the high interest rate when I signed the contract.
Of course, for some viewers, we may feel that the fixed deposit interest rate is still too low, what should we do?There are three more workarounds.
The first is not to deposit fixed deposits in large state-owned banks and joint-stock banks, but to find some small and medium-sized urban commercial banks and rural commercial banks.
At present, everyone's salary card is generally issued by a large state-owned bank or a joint-stock bank, and we may save it casually. However, the deposit interest rates of large state-owned banks and joint-stock banks are generally lower because they are guided by the state.
We can find some urban commercial banks and rural commercial banks that are in urgent need of deposits, and the deposit interest rates of these banks are more market-oriented, and they are usually higher.
However, we need to be aware that small banks may be operationally risky.
Even if our deposit amount is less than 500,000, it is covered by the state deposit insurance. But once there is an incident like the "Henan Village Bank", although it is also paid in the end, the process is still quite disturbing.
Therefore, we need to strike a balance between "high interest" and "low risk".
So, which banks are less risky?
Here Bai Nian provides you with a complete list of Chinese commercial bank ratings, and put it in the comment area. If the bank's credit rating is above "A", then the risk is still manageable.
If the rating is below "A", or even no rating, it may mean that there is some risk and it is not advisable to deposit money in these banks, although the interest rates they offer may seem attractive.
The second workaround is that if the family has hundreds of thousands of large amounts of idle funds, they can buy large certificates of deposit.
Large-denomination certificates of deposit are deposit products provided by commercial banks to attract large customers, and the interest rate is generally relatively high.
For example, after this rate cut, the interest rate of the Agricultural Bank of China's 3-year large-denomination certificate of deposit is 235%, which is 0. higher than the regular 3-year fixed deposit rate4%。
If you have hundreds of thousands of idle funds at home, you can talk to your bank manager to see if you can deposit a large amount of CDs.
The third is that we can buy long-term Treasury bonds.
On the 10th of every month, there are savings bonds** at the bank counter.
At present, the listed interest rate of 5-year time deposits of large state-owned banks is 20%, while the 5-year Treasury rate is around 2At about 7%, the interest is still relatively fragrant.
There is no risk in buying treasury bonds, but the bank quota may be relatively limited and you need to grab it.
If you are interested in purchasing, please contact your bank counter for details.
In addition, in addition to fixed deposits, similar fixed-rate products include pension insurance.
In June 2023, under the guidance of the government, the scheduled interest rate of Chinese insurance products will increase from 35% to 30%。
According to ** report, after this round of adjustment, the premium increase of annuity insurance, whole life insurance and other products is generally about 18%.
However, the last round of insurance rate cuts is certainly not the end of interest rate cuts.
Again, when will the interest rate be cut again, so if you are considering buying commercial pension insurance, it is not too late to buy it now.
Then, the above workarounds about depositing time deposits are suitable for friends who are completely unacceptable to the risk and have a relatively long period of idle funds, generally middle-aged and elderly friends.
For many young people, when they are young, they need a lot of money, buy a house, buy a car, get married, have a baby, and you ask me to save for a year, but I can't get such money.
At the same time, young people can generally accept some risks a little, so Bai Nian will give everyone a second trick -Go and buy pure debt-based bank wealth management and public offerings
Pure debt bank wealth management and public offerings**, which invest in bond-like assets. For example, they also buy government bonds, or some bonds issued by large state-owned enterprises, which are usually less risky.
There are three advantages of this type of product.
The first one is that the yield is slightly higher.
As I mentioned earlier, the interest rate on treasury bonds is higher than that of fixed deposits, and these products are purchased treasury bonds, so the returns are higher.
At present, the annual yield of pure debt products in the market can usually reach about 3%.
The second advantage is that this type of product has better liquidity.
Compared with fixed deposits, which lock the funds for a year, pure debt products usually only require 3 or 6 months of fixed deposits, or can be redeemed daily, which is more in line with the habits of young people to use funds.
The third advantage is that pure debt products can benefit from interest rate cuts.
For the bond market, every drop in interest rates corresponds to the ** of bonds, and it will also increase the capital gains of pure debt products.
Therefore, under the general trend of China's "low interest rate", pure debt products will benefit in the long run.
However, there are also certain risks associated with this type of product.
On the one hand, if China is going to raise interest rates one day, then the ** of bonds will **. The return on pure debt products will decline, and the possibility of loss may not even be ruled out.
On the other hand, some managers of pure debt products have purchased some high-risk junk bonds in order to pursue high yields one-sidedly. If these bonds default, it is the investors who lose money.
In order to bypass this kind of product, Bonian strongly recommends that you read the risk description of bank wealth management in detail, and the risk level of the wealth management products we buy should be controlled below "R3" as much as possible.
Public offering**, there is no similar risk level, what should I do?We can tell by its size.
A treasure can directly look at the product scale of the corresponding **, the general scale of more than 10 billion pure debt **, the level of risk management will not be bad.
Further comparing the two varieties of "bank wealth management" and "public offering**", Bonian recommends public offering **.
Although they invest in bond-like assets, the public offering ** enjoys the statutory "tax exemption advantage", free of value-added tax and income tax, and the income may be higher.
The third trick is that if you are more able to bear a higher risk, you can goPay attention to the "bonus section" in **
The average person votes to benefit from the stock price.
However, there are also a lot of ** in A-shares, and the income mainly depends on dividends.
For example, in the energy and transportation sectors, the company's operation is very stable and there is little room for growth, but the dividend yield can reach 5% or even more.
The corresponding investment strategy is called the "dividend strategy", which is characterized by the fact that the income mainly depends on dividends, which is relatively controllable.
In the article 2 weeks ago, Bai Nian recommended the index of "CSI Private Enterprise Dividend", and interested friends can watch it back. From a long-term perspective over the past 10 years, the return on earnings is still good.
CSI Private Enterprise Dividend Total Return Index.
In the end, in the face of the long-term decline in deposit interest rates, there are three effective coping strategies for ordinary people:
1. Deposit time deposits as soon as possible and for a long time. And in the choice of banks and products, we can have some strategies.
Second, the purchase of pure debt type of bank wealth management and public offering**, better liquidity, can be used as a substitute for time deposits.
3. Pay attention to the dividend sector in ** and obtain higher returns through dividends.
The above are the three tricks that Bai Nian gave to everyone, I don't know if it will help you. If you find it helpful, please like and follow me.
As China's economic reform draws closer, the follow-up will bring more relevant economic interpretations in a timely manner.
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