The Compensation for Time of Service (CTS) has a dual purpose, the first related to termination of employment and the second the promotion of the worker and his family. In the first case, it seeks to prevent the contingencies to which a worker is exposed when he loses his job. That is why the norm establishes an intangible amount of 4 gross remunerations, thinking about this aspect, commented Alfredo Marín, deputy manager of BanBif Retail Products.
He explained that the second purpose, the use of the CTS fund, allows it to improve the style and quality of life of the worker, for this reason the amount above the 4 remunerations can be made available, including the interest generated monthly.
For this reason, Marín details the most frequent mistakes made by workers when investing the CTS:
- Trust that you can rebuild your savings quickly, that is, think that you will not need it in the short term.
- Have the CTS to satisfy needs that are unlimited without worrying about having a liquid reserve fund and according to your needs.
- Invest without understanding that in an investment you can lose even the capital and with it your reserve fund.
- Not knowing what interest rate the entity pays you, if your money is going to stay for several months, it is best that you receive a significant interest rate in an entity that gives you the security you require.
It is necessary to remember that the CTS must become a reserve fund, it should not be used unless it is an emergency, if statistically we are all going to lose work at some point, let the CTS be the one to help us in that transition, that’s what it exists for.
The manager offers three tips to take better advantage of the CTS:
- Seek profitability improvement in a solid entity. The CTS account usually pays better than a savings account and a fixed-term deposit, however it is a matter of asking the financial institution about the performance.
- Open an account in a different currency and diversify to save for the long term.
- Look for an entity that, in addition to paying an acceptable interest rate, offers promotions and raffles, since that money will not be touched for several months.
Keep in mind
- The CTS has a feature that no other account has and that is intangibility, that is, in addition to paying a better rate, that money is not subject to seizure except in rare situations, which is an advantage.
- Saving is postponing present spending for a future expense, one saves today to spend tomorrow, if you decided, look for the best option.
