It's time to invest: 8 out of 10 Russians plan to invest income from deposits

Russians do not believe in freezing deposits. Despite the increased interest in this topic, 77% of those with deposits are not only not going to withdraw money from them, but also plan to reinvest their income, according to the results of a survey conducted by the Moscow Financial Services marketplace. Moreover, some people consider other forms of investing their funds — stocks, bonds, pension funds, mutual funds, and so on. Experts interviewed by Izvestia are confident that as deposit rates decrease, investors will simply resort to other financial instruments more and more, and there will be no hysteria and outflow of money from deposits.

Why don't people withdraw money from deposits

77% of Russians plan to reinvest interest income from deposits received in 2024, the press service of the Finuslugi marketplace told Izvestia, based on data from their own research. And although after the December decision of the Central Bank to keep the key rate at 21%, banks began to reduce the promised yield (now it is already less than 21% for some organizations), people still find investments in deposits extremely attractive. According to calculations that experts made for Izvestia in the fall, last year Russians could receive about 6 trillion rubles from deposits and savings accounts.

According to Igor Alutin, Senior managing director of the Moscow Exchange for retail business, development of electronic platforms and the Finuslugi project, 80% of those who are ready to reinvest their income plan to put money back into the deposit.

— Deposit rates are at record high levels, reaching a historic high in 2024. This has increased the demand for bank deposits," said a representative of the Moscow Exchange.

Interest expense: every second major bank reduced deposit rates

Is it profitable to deposit funds and can they be frozen?

People are also looking at other types of investments, the Finuslug survey showed. So, half of the respondents also do not exclude that they will direct income from deposits to other instruments: 33% plan to buy stocks, 21% want to buy real estate, about 19% are thinking about investing in bonds, 16.8% want to direct funds to pension funds, and 14.2% — to mutual funds (mutual funds). In the case of possible reinvestment options, the study participants could choose more than one answer option.

— Banks have begun to reduce deposit rates, and this is reflected in the dynamics of the flow of funds in accounts — people are starting to look for tools that will allow them to maintain high returns for as long as possible. At the same time, we do not see a significant outflow from deposits: this is one of the most secure options for savings, and if deposit rates remain above the inflation rate, they will remain popular," said Igor Alutin.

But almost one in four (23%) respondents replied that they were not going to invest the income they received, but intended to spend it on personal and family needs. For example, Russians prioritize spending on mortgages, repairs, recreation (travel), education, and self-development. In general, it is quite reasonable spending, which is far from "hysterical consumption," says Gennady Fofanov, president of the Invoicafe investment platform.

Where to invest in addition to deposits

— The survey results, including those related to the diversification of investments, indicate a rational approach to financial planning, he added. — And the high percentage of respondents focused on reinvestment indicates confidence in the banking system and the absence of concerns about the freezing of deposits.

The fact is that last year, at the suggestion of some experts, the topic of a possible deposit freeze began to be actively discussed. They explained their position by saying that after a reduction in deposit rates, there would be a massive outflow of funds from the banking system and huge amounts of money would flow into the consumer market, which would accelerate inflation. However, these warnings did not cause any hysteria or outflow from deposits.

The survey results really reflect a high level of confidence in the banking system, agrees Nadezhda Kapustina, professor at the Department of Economic Security and Risk Management at the Financial University under the Government of the Russian Federation. In her opinion, no revolutionary movements of funds will occur even after the reduction of interest on deposits.

— As rates decrease in the long term, we are likely to see a gradual reallocation of funds to other investment instruments, but this process will be fairly smooth. The diversification of the investment portfolio demonstrated by the respondents (interest in stocks, bonds, mutual funds) indicates the growing literacy of the population. This is a positive trend for the financial market as a whole," she said.

Yuri Belikov, Managing Director of the Expert RA rating agency, also considers the deposit freeze to be a fantastic theory.

— I do not think that the adherents of this cult have a significant impact on the market, in particular on the dynamics of the deposit base. Of course, outbreaks of panic and the corresponding volatility do occur, but, as a rule, they are motivated by events of global uncertainty and can hardly be associated with normal, time—stretched trends, like the expected rate cuts," he stressed.He suggested that as this process progresses, retail investors' interest in equity instruments may be fueled, as it was in 2020-2021. But for this, deposit rates must fall below double digits, and this is a horizon of more than one year, Yuri Belikov has no doubt.

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And Gennady Fofanov believes that deposits will begin to lose their appeal to conservative investors when the real (minus inflation) yield approaches zero or becomes negative. When the rates drop to 5-6%, significant funds will flow into alternative instruments. But, given the current promised profitability and the Central Bank's forecast for the key trajectory, this will not happen soon.

Already, among promising alternatives to bank deposits, Yuri Belikov noted the growing popularity of government and corporate bonds issued by high-quality issuers, which, with a comparable level of risk, can provide returns slightly higher than those of deposits. At the same time, the representative of Expert RA believes that the peak of investment demand for real estate has clearly passed, since after the end of preferential programs and rising prices in this segment, it is unlikely that we should expect the same demand for housing purchases as it was observed from 2020 to 2023.