Since the third quarter of this year, a number of banks have updated the RMB deposit reference interest rate table on their official websites and lowered the listed interest rates of medium and long-term time deposits. On the whole, the listed interest rates of 1-year, 2-year, 3-year and 5-year fixed deposits of banks have generally been reduced by 10 basis points to 40 basis points.
Why are bank deposit rates lowered? What should ordinary investors do? Yangtze Evening News specially invited Suyin Wealth Management to answer your questions.
Question 1
Why is the deposit rate lowered?
There are two main reasons for the reduction in bank deposit rates.
First, the deposit interest rate is actually part of China's monetary policy, and after 2019, the central bank has lowered the benchmark deposit interest rate and loan benchmark interest rate many times to stimulate the liquidity of the financial market by adjusting the money supply in the market. On the one hand, it will guide deposit funds into the real economy and encourage residents to convert more deposits into consumption; On the other hand, it will promote the development of loans, guide the flow of credit funds to the real economy, reduce the cost of capital for enterprises, help promote investment and consumption, and balance economic growth.
Second, from the perspective of banks, the reduction of deposit interest rates will help protect the stability of banks' interest margins, reduce the cost of bank liabilities, further promote the steady decline of loan interest rates, and enhance the comprehensive strength of banks and their ability to serve the real economy.
Question 2
What should ordinary investors do when interest rates are lowered?
The requirements for wealth accumulation on financial tools have three common characteristics: security, profitability and stability. Deposit interest rates are declining, and investors with low risk appetite can choose other products with stable investment and high liquidity, such as money market funds and cash management wealth management products.
Investors need to balance the relationship between risk and return. If a higher proportion of deposits are allocated to the portfolio, the return on investment may decrease due to policy. If investors want to pursue relatively stable returns and can also take certain risks, then they can choose to appropriately allocate some stable wealth management products in addition to deposits to balance returns, such as cash management wealth management products are a good choice.
Question 3
What are the characteristics of cash management wealth management products?
Cash management wealth management products refer to the wealth management products of commercial banks or wealth management companies that invest in money market instruments and can subscribe and redeem product shares on each trading day. The reason why it is called "cash management wealth management products" is because this type of product mainly provides "cash management" and "idle money wealth management" services, which have the characteristics of controllable risks, flexible application and redemption, and relatively stable returns.
Since the continuous reduction of bank deposit interest rates, cash management wealth management products have become a favored investment object, mainly because from the perspective of income, security and flexibility, cash management wealth management products are a better investment choice.
First of all, the dividends of cash management products are reinvested, and the income is relatively stable. For example, the average seven-day annualized rate of return for the period from January 2023, 1 to October 1, 2023 is 10.31%, which is higher than the average one-year lump sum deposit interest rate of banks in the same period.
Secondly, the security of funds is high and the risk is controllable. Cash management products mainly invest in money market instruments such as cash, bank deposits, bond repurchases, central bank bills, and interbank certificates of deposit, and are suitable for low-risk investors. The Qiyuan cash series products of Suyin Wealth Management are valued by the amortized cost method, which is less volatile and has a better customer holding experience.
In addition, the subscription starting point is low, and the subscription and redemption are flexible. The minimum subscription starting point of cash management wealth management products can be as low as 1 point, the subscription and redemption are relatively convenient, without too many restrictions, and some cash products provide customers with quick redemption options, which is the best choice for investors to manage short-term idle funds. Taking Suyin Wealth Management Qiyuan cash series products as an example, a single product has a quick redemption limit of 1,7 yuan per natural day, and it will arrive in real time 24 hours a day, <> × <> hours to meet the urgent needs of daily funds.
Question 4
How does the product balance risk and return?
In terms of asset allocation strategy, Suyin Wealth Management Qiyuan cash wealth management products choose to focus on low-risk and high-liquidity assets such as bank deposits, repos, and interest rate bonds, and the risk level of the product is R1, which is the lowest risk type of wealth management product.
At the same time, according to the changes in different stages of the market, on the one hand, Suyin Wealth Management selects high-quality AAA short-term high-rated assets through internal prudent credit analysis methods, dynamically adjusts the positions in the portfolio and continuously optimizes the portfolio income under the premise of controlling the credit risk of the portfolio; On the other hand, through the study and judgment of the market, we will seize high-liquidity and high-yield assets such as repo deposits in a timely manner at key points, and adopt certain leverage strategies and trading strategies to increase product income and give back to customers.
Question 5
What are the precautions for choosing a product?
Different from deposits, the purchase of wealth management products usually need to pay a certain percentage of subscription fees, subscription fees, redemption fees, management fees, sales fees, custody fees and other fees.
In addition, when investors choose wealth management products, they should understand the assets invested in wealth management products and pay attention to whether they are consistent with their own risk appetite; At the same time, it is also necessary to understand the subscription and redemption mechanism of wealth management products and judge whether the liquidity is in line with the funding arrangement.
Wholly owned by Bank of Jiangsu, Suyin Wealth Management ranks among the top urban commercial financial institutions in terms of the scale of its wealth management business, and has been ranked first among urban commercial financial institutions in terms of comprehensive financial management ability for 31 consecutive quarters.
Note: The data in this article comes from unaudited statistical results, please refer to the official and audited report figures, and do not replace personal judgment with the views in this article.
Wealth management is not a deposit, the product is risky, and investment should be cautious.