EDO vs COI vs TOS — Which Polish Treasury Bonds to Choose in 2026?

Quick Answer

EDO (10-year) is the best long-term choice — inflation-indexed with compound interest. COI (4-year) works for medium-term goals with inflation protection but without locking money for a decade. TOS/OTS (3-month) is your short-term pick — fixed rate, zero penalty, money back in 3 months.

Three Bonds, Three Strategies

Choosing between EDO, COI, and TOS comes down to one question: how long can you invest? Each bond has a different interest mechanism and risk profile.

TOS (OTS) — 3-Month Bonds

When to Choose TOS

• You need liquidity — money returns in 3 months
• You're looking for a safe place to park cash short-term
• You have a major expense coming within 6–12 months
• You don't want to risk losing interest on early redemption

Real Returns

At ~3.00% rate with inflation at 4.5% (NBP forecast for 2026):

• Nominal rate: 3.00%
• After Belka tax (19%): 2.43%
• Real return: –2.07% (purchasing power loss)

TOS does not protect against inflation. It's a liquidity tool, not an investment vehicle.

COI — 4-Year Inflation-Linked Bonds

When to Choose COI

• Your investment horizon is 2–5 years
• You want inflation protection without a 10-year commitment
• You're saving for a goal like a down payment in 3–4 years
• You prefer annual interest payments

Real Returns

Year 1: fixed rate ~6.75%. From year 2: CPI inflation + 1.00%.

With average 4.5% inflation over 4 years:

• Average nominal rate: ~5.90% per year
• After Belka tax: ~4.78%
• Real return: ~+0.28% per year

COI delivers a slightly positive real return at moderate inflation. Higher inflation means higher returns.

Early Redemption Cost

If you redeem COI early, you lose:

• 0.70 PLN fee per bond (face value 100 PLN)
• Interest for the most recent interest period

Redeeming after 2 years costs roughly 0.7% of your investment value.

EDO — 10-Year Inflation-Linked Bonds

When to Choose EDO

• Your horizon is 5+ years (ideally full 10)
• You want maximum inflation protection
• You're building a long-term savings portfolio
• You're saving for retirement or children's future
• You believe inflation in Poland may resurface

Real Returns

Year 1: ~6.80% fixed. From year 2: CPI + 1.00% with annual interest capitalization.

With average 4.5% inflation over 10 years:

• 10,000 PLN after 10 years: ~17,080 PLN (pre-tax)
• After Belka tax: ~15,735 PLN
• Real return: ~+0.81% per year (after inflation and tax)

EDO's key advantage is compound interest — interest added annually to principal generates more interest. Over 10 years, this difference is substantial.

High Inflation Scenario

At 8% inflation (like 2023):

• EDO pays: 8% + 1% = 9% per year (from year 2)
• 10,000 PLN after 10 years → ~23,670 PLN (pre-tax)
• Real return: clearly positive despite high inflation

Early Redemption Cost

• 2.00 PLN fee per bond (2% of face value)
• Loss of interest for the last period
• Redeeming after 5 years costs roughly 1.2% of accumulated value

Decision Tree — Which One?

Do you need the money within 12 months?
├── YES → OTS (3 months, no penalty)
└── NO
    ├── Is your horizon 2-5 years?
    │   ├── YES → COI (4 years, inflation + 1%)
    │   └── NO
    │       └── EDO (10 years, inflation + 1% + compounding)
    └── Are you an 800+ program beneficiary?
        ├── YES → Consider ROS (6yr) or ROD (12yr) — higher margin
        └── NO → EDO

Bond Ladder Strategy

You don't have to pick just one. Many investors use a bond ladder:

1. 20% in OTS — liquidity reserve, renewed every 3 months
2. 30% in COI — medium-term goals (3–5 years)
3. 50% in EDO — long-term portfolio core

This approach combines liquidity with inflation protection. Each quarter, when OTS matures, decide: renew OTS or move funds to COI/EDO.

Common Mistakes

1. Buying only OTS — you're losing purchasing power to inflation
2. Redeeming EDO after 2 years — you lose interest and pay a penalty; COI would have been better
3. Ignoring compounding — the gap between COI and EDO grows over time
4. Comparing only nominal rates — always calculate real after-tax returns

FAQ

Can I buy all three types simultaneously?

Yes — there's no limit on how many types you hold. You can own OTS, COI, and EDO in any proportion at the same time.

What happens if inflation drops to 0%?

COI and EDO pay at minimum the margin (1.00%), so at zero inflation you get 1.00% plus the first-year promotional rate. The rate won't go negative.

Is EDO worth buying for less than 10 years?

EDO makes sense if you can hold for at least 4–5 years. For shorter periods, COI is a better choice — lower early redemption penalty and similar inflation protection.

How do I check current interest rates?

Current rates are published on obligacjeskarbowe.pl before each issuance (usually at the beginning of each month). Freenance automatically tracks the rates on your bonds.

Are Treasury Bonds subject to Belka tax?

Yes — all types are subject to 19% capital gains tax. The tax is automatically withheld when interest is paid or bonds are redeemed.

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