- According to the Yanhaas firm survey, Colombians spend their bonuses mostly on clothing purchases (14.9%), tourism (12.7%), and debt repayment (12%).
- Savings, paying off some debts, and investing in alternatives adjusted to the risk profile are the three recommendations Protección makes for making good use of this resource.
- Finding a savings or investment alternative with a medium and long-term purpose can be a recommended path to allocate part of this benefit that arrives these days to alleviate workers' finances.
- The high interest rates in the market offer very interesting alternatives for savers and investors.
Medellín, Colombia, December 1, 2023. The most anticipated moment for many Colombians is approaching: the payment of the end-of-year bonus, an opportunity to make savings and investment decisions that contribute to building a more solid future through the wise use of this money.
While the holiday season evokes moments to gather with family and exchange gifts, which opens the door to commerce and shopping, it is essential to consider conscious strategies to manage spending and making the most of the last bonus of the year. The bonus payment period marks an invaluable opportunity to promote a culture of saving and, in turn, contribute to the financial and emotional well-being of individuals.
According to a survey conducted by the Yanhaas firm, Colombians mostly use their bonuses to buy clothes, with 14.9% of responses, followed by tourism with 12.7%, and debt repayment with 12%.
In this context, Protección recommends investing bonuses in three key areas. First, it is recommended to save between 20% to 30% of the bonus to have peace of mind in the future, as savings allow creating an emergency fund to deal with unexpected situations, such as job loss, illness, or unforeseen expenses.
"In the face of a possible economic slowdown like the one we are experiencing; saving is the best way to create a reserve that allows individuals and their families to protect themselves. It is important that when looking for savings or investment options, people focus on alternatives in expert entities with knowledge in investments, which help them design an accurate strategy adjusted to the risk profile and investment horizon," explains Julián Cárdenas, savings and investment strategist specialist at Protección.
Fixed income remains attractive
Currently, in Colombia, there are conditions for saving that have not been favorable for several decades. The high-interest rates and an expectation of improvement in inflation, currently at 9.8%, are generating a unique appeal for building a "cushion" that could grow thanks to the current market conditions and, with consistency, could be the basis for achieving personal and family goals.
"The current risks (gasoline prices, the El Niño phenomenon, and the evolution of the Colombian peso against the dollar) lead us to think that the disinflation process will occur more slowly than previously estimated, and to that extent, the expected rate cut will also be postponed. Currently, the rate is at 13.25%. Until August, expectations were that the Central Bank could bring its rate to a level of 9.5%, now the expectation is around 12.8%, that is, we would only have cuts of around 50 bps. That is why we consider that local fixed income is still at very attractive levels and that it may be a good time to invest or save in this type of asset," explains Julián Cárdenas, savings, and investment strategist specialist at Protección.
This market opportunity for investment also presents a challenge in terms of debt. Therefore, Protección invites citizens who receive extra income these days to decrease their level of indebtedness, as paying off a loan or debt, perhaps those with the highest interest rates such as credit cards, would be positive to free up monthly cash flow and thus improve people's mental and financial well-being.
"Cutting and recording expenses, including savings in the monthly budget, establishing a purpose and goal for savings, and including automatic savings options such as voluntary pension contributions from the payroll, are some recommendations to achieve this purpose," concludes Julián Cárdenas, savings, and investment strategist specialist at Protección.
Finally, Protección invites people to bet on early saving as a way to complement their pension, building from the present a retirement plan that guarantees financial well-being in the future.
***
About Protección:
Protección S.A. is a company specialized in savings and investment, with 30 years of experience in managing resources totaling more than 130 trillion pesos from 8.3 million clients in Mandatory and Voluntary Pension Funds and Severance Funds, as well as more than 73,000 pensioners. The Company has transcended its category, energizing its business focus on managing assets destined for mandatory pensions and severance pay, to take it to the next level, which involves mobilizing and managing savings to be an ally of its stakeholders to accompany them in achieving their dreams and building their future.
