DIP

A new financial product - DIP - "long-term investment product" was created to motivate citizens to invest in their pension. A DIP is actually a box into which a normal investment product of YOUR CHOICE is placed at licensed investment companies that can negotiate it. When you have your product in DIP, you can benefit from tax savings and your employer can send you contributions.

Pros: Tax savings of up to 7,200 CZK per year. No income tax is paid at the end. Freedom in choosing a product. Employer's contribution up to CZK 50,000 per year. Even if the client withdraws earlier than in 10 years and in 60 years and returns the saved funds to the state, it is actually a normal investment product that everyone should have anyway.

 

With an annual deposit of CZK 48,000, this is a saving of CZK 7,200/year at 15% tax, it is CZK 144,000 over 20 years.

 

Cons: Liquidity reduction for 10 years and withdrawal after 60 years of age while maintaining the benefits of the product. The state can change tax deductions in the future for better or for worse.

 

It is ideal to establish a new DIP and not to put an old investment product in it. The client would lose liquidity with the deposit, but he would not get a tax saving for the deposited money.

It is possible to combine it with supplementary pension insurance (DPS), where the client receives a state allowance of up to CZK 4,080/year. That's CZK 81,600 in state benefits over 20 years. The possibility of transferring old transformed funds with guaranteed appreciation (earned an average of 1% p.a. over 10 years) to the DPS of any company has also been improved for the pension. Transfers that used to take several months are rapidly shortened.

Whether the state changes contributions or tax breaks in the future, I consider DIP to be a step in the right direction.

Less appreciation of savings accounts

Another novelty is the reduction of the CNB's REPO rate, which to a certain extent determines the interest on loans and at the same time the interest on savings accounts. The CNB wants to reduce rates until it reaches the inflation target of 3% per year. The average REPO rate since 2000 is 2.5%.

• https://www.cnb.cz/cs/verejnost/servis-pro-media/autorske-clanky-rozhovory-s-predstaviteli-cnb/Eva-Zamrazilova-Inflace-se-vyrazne-snizi-00001/
• https://www.cnb.cz/cs/casto-kladene-dotazy/Jak-se-vyvijela-dvoutydenni-repo-sazba-CNB/

ALTERNATIVES for SOME clients can be bond funds of companies such as Conseq or J&T. These investment funds (risk 2 out of 7) have historically only earned around 4% p.a., but thanks to the current situation - the fall in interest rates, the expected return over a 3-year horizon is 7% p.a. + clean for clients. The yield - unlike savings accounts - is, while complying for 3 years tax-free !

Detailed information below.

• https://www.conseq.cz/investice/prehled-fondu/conseq-invest-dluhopisovy-fond-a
• https://www.conseq.cz/investice/prehled-fondu/j-t-bond-czk

In case of questions and arrangements, do not be afraid to contact me.