Investment approach
Real Estate, Deposits, Bonds: Comparing on One Horizon
Real estate, deposits and bonds are compared by the final money on one date, after tax and adjusted for liquidity. I show the method on an 18-month worked example, without a recommendation.
Real estate, deposits and bonds are compared not by advertised rates but by the money you will actually hold on the same date, after taxes and costs. To do that, you set a horizon, calculate all cash flows for each option and separately assess what you lose in liquidity and in the reliability of the assumptions. Below are the method and an 18-month worked calculation. It is a way of calculating, not advice on what to choose.
What rates were in force in Spain and the eurozone on 12 October 2026
Reference points are taken from official publications with a date. The figures for bonds and bills come from press reports of Tesoro Público auction results: the Treasury's own site did not open when I checked.
| Indicator | Value | Source and date |
|---|---|---|
| ECB deposit facility rate (banks' deposits) | 2.50% | ECB, in force since 16 September 2026 |
| New term deposits of households, eurozone average | 2.18% | ECB, Banco de España translation, August 2026, published 1 October |
| Letras del Tesoro (Treasury bills), 12 months, marginal yield | 3.026% | auction of 6 October 2026, Roams citing Tesoro Público |
| Obligaciones del Estado (government bonds), 10 years, marginal yield | 3.545% (August, for later auctions see below) | auction of 6 August 2026, Bolsamanía |
| IPC inflation, flash estimate for September | 4.9% | INE, 29 September 2026 |
The deposit figure covers the whole eurozone; for Spain on its own, look at Banco de España statistics. For 10-year bonds, the August result is shown, with its date. At the September and October auctions the yield, according to press accounts, was noticeably higher (around 4%), but I could not confirm it against a primary source. So the bond in the calculation below is run on worked-example yields of 3.0–4.5%, not on this figure. IPC measures past price growth, while rates look forward: subtracting one directly from the other gives a guide, not an exact result. What to do about inflation in the calculation is covered in the article on real return.
How to bring three options to one horizon
- Choose an exit date. For a renovation project this is usually the sale date, for example 18 months. The deposit and the bonds are compared at the same date, not at their own maturity.
- List all cash flows for each option: investments, interim payments, costs, the final amount. For a project, the typical omissions are collected in 12 calculation mistakes.
- Set a rate at which money returned earlier works until the common date. Without it, comparing options with different terms is impossible: more in the article on equity multiple and IRR.
- Deduct taxes for your status. For a resident, interest on deposits and bonds is by the general rule taxed in the savings base; the state part of its scale runs from 9.5% to 15% (AEAT, gravamen estatal, Renta 2025), and a regional part is added to it. For a non-resident, art. 14 TRLIRNR contains exemptions, including for income from government debt and on non-residents' accounts, but with conditions. An asesor fiscal (tax adviser) is needed here. Tax rules change: since 8 October 2026, Real Decreto-ley 29/2026 (BOE-A-2026-20823) has been in force, affecting certain taxes: IRPF, IVA (VAT), IBI, plusvalía. The previous housing act, 26/2026, was not ratified by Congress, the fate of the new one is unknown, and it is not included in the calculation.
- Assess separately what a number cannot express: liquidity, the reliability of the assumptions, how long the exit will take.
Worked calculation for 18 months
Worked example, not a forecast. Capital of €543,000, an 18-month horizon, everything before tax. The renovation project is taken from the article on calculating returns: the assumption is that it returns €614,400. The deposit and the letras are calculated at the rates in the table above, the bond on worked-example assumptions.
| Option | Assumption | Result, € | Result over 18 months |
|---|---|---|---|
| Renovation project | sale for €640,000 | 614,400 | +13.1% |
| Term deposit | 2.18% a year, rate does not change | 560,853 | +3.3% |
| 12-month letras, rolled over | 3.026% a year for the whole term | 567,832 | +4.6% |
| 10-year bond, sold after 18 months | worked-example assumption: 3.5% annual coupon, bought at par, no taxes or fees; sold at a yield of 3.0% | 591,544 | +8.9% |
| Same at a yield of 3.5% | 571,426 | +5.2% | |
| Same at a yield of 4.0% | 552,172 | +1.7% | |
| Same at a yield of 4.5% | 533,740 | −1.7% |
What the table shows. The gap between the project and the deposit is large, but it is payment for illiquidity, work and risk, not a free extra: the project brings 13.1% only under the assumption about the sale price. If the sale price turns out 7.6% lower (€591,492), the result falls to the level of the letras. A 11.6% fall in price brings it to zero, as in the article on the break-even point.
The bond shows something else: yield to maturity is known only to those who hold to maturity. If you sell earlier, you get the market price, and it depends on rates on the day of sale. Over an 18-month horizon a long bond gives a wide spread, while short letras are closer to a deposit in predictability.
How the options differ besides the number
| Real estate (project) | Deposit | Bonds and letras | |
|---|---|---|---|
| Early exit | No, only selling the property | Usually with loss of interest | Sale on the market at the market price |
| Protection | No guarantees, a loss is possible | Fondo de Garantía de Depósitos: up to €100,000 per depositor in one bank | Issuer and price risk; for a state the credit risk is low but not zero |
| What is unknown | Sale price, term, estimate | The rate after the term ends | Price on early sale, reinvestment rate |
| Minimum ticket | Hundreds of thousands of euros | Any | From a small amount |
Who this comparison does not suit
Someone choosing between the options for regular income: the project pays its result at the sale, while deposits and bonds pay on a schedule. Someone who may need the money before the project ends. Someone whose goal is not capital growth but diversification across asset classes: that answers a different question.
You can run your own project assumptions through the investor calculator, and the principles of calculation are described on the /methodology page. Whatever the comparison shows, it is a calculation under your assumptions, not a recommendation to invest anywhere.
Questions and answers
Which is better: real estate, a deposit or bonds?
There is no single answer, and I will not give one. The result depends on the horizon, the taxes of your status, the entry and exit prices, and for a project also on assumptions that will not be confirmed until the sale. Compare the final money on one date.
Why can't I just compare annual percentages?
Because the options have different terms, taxes and risks. A project with 13% over 18 months and a deposit at 2.18% a year cannot be put side by side without bringing them to one horizon.
Are government bonds safer than a deposit?
They carry different risks. A deposit of up to €100,000 per depositor in a bank is protected by the guarantee fund; a government bond is backed by the issuer's creditworthiness, but if sold before maturity the price may be lower than the purchase price.
Do I need to account for inflation when comparing?
Yes, if you are comparing purchasing power. With the flash IPC estimate of 4.9% for September 2026, rates of 2–3% give a negative real result, and the estimate of future inflation remains an assumption.
