Savedo, the multi-asset retail investment platform has launched an innovation in the German fixed-term deposits market. Structured Deposits, or “FestgeldPLUS” as named by Savedo, is available to savers in Germany exclusively via Savedo’s online platform. The new product is offered in collaboration with the innovative Portuguese investment bank Banco de Investimento Global, S.A. (BiG).
We talked to Björn Jüngerkes, Managing Director of Savedo GmbH, about their new asset class and its advantages for customers.
FinLeap.com: What is the new product FestgeldPLUS?
Björn: FestgeldPLUS is a new powerful asset class that helps the traditionally conservative German savers to diversify their investment portfolios. It bridges the gap between safe returns and potential upside. By doing so, it offers an attractive alternative to conventional fixed-term deposits with comparatively low interest rates as they are prevalent at this time in the European market. FestgeldPLUS is Savedo’s fourth asset class after fixed term deposits, flexible term deposits, and precious metals.
FinLeap.com: How does FestgeldPlus work?
Björn: Our customers invest in a fixed-term deposit at our partner bank BiG from Portugal. An investment in FestgeldPLUS can pay a return of up to 3.15 % p.a. for a 12 month term – compared to a maximum of 1.6 % p.a. currently paid by foreign banks in Germany. While for regular fixed-term deposits the interest rate is fix, for FestgeldPLUS it depends on the performance of four underlying stocks. If at the end of the term the stocks have not fallen below the price at the outset, the high return gets paid, otherwise investors get back their initial investment as well as a minimum interest for some products. Based on the feedback of our customers and prospects, we have developed FestgeldPLUS in cooperation with our partner bank BiG, which was named the “Best Medium or Small Portuguese bank” by the business magazine Exame for the ninth time in ten years. Further, BiG has won the award for the country’s “Most Solid Bank” in the same category for the past six years.
FinLeap.com: Why is this an innovation for your customers?
Björn: There is no comparable product in the German market. The big difference to other products lies in the structure of FestgeldPLUS: The customer essentially invests in a fixed-term deposit product which is secured by the Portuguese deposit guarantee scheme up to EUR 100.000. Hence there is no issuer risk as it is the case with other products such as certificates. At the same time, with FestgeldPLUS, customers can benefit from positive developments in the stock markets without risking their capital.
FinLeap.com: Why is this bringing value to customers?
Björn: Interest rates for savings products are at all-time lows, meanwhile inflation in Germany has risen to 2.2 % in February, a level last experienced in August 2012, after being at almost 0.0 % just one year ago. At the same time stock markets continue to rally, for instance the German DAX has risen by over 20 % in the last twelve months. FestgeldPLUS allows retail customers to participate in the upside of the stock market – without taking the risk of losing their investment. By offering both, the guaranteed safety of a fixed-term deposit with the dynamics and potential high returns of the stock market, we combine the best of two worlds in one very attractive investment product. This way, retail clients can benefit from returns of up to 3.15 % p.a. on a 12-month term. During the first week since product launch we have already seen an enormous demand for the two initial products, so you can be sure that we will launch more soon.