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What currency is it more profitable to save up in?

When saving up money, it is very important to protect it from constant inflation. An important factor here is the currency in which you save money. Everyone remembers the financial crises of the last two decades, when the tenge has depreciated in a matter of days or even hours. In this material we will talk about which currency is better to save in, compare inflation in different countries and saving offers that are on our market.
What currency is it more profitable to save up in?

According to the National Bank report, annual inflation in the country accelerated in June 2022 amounting to 14.5% (in May - 14%). It is worth noting that in the summer the rise in prices usually slows down, and for certain categories of goods it stops. This year, however, is different. Therefore, analysts believe that by the end of the year we are expecting for an additional round of money depreciation. “There are internal causes of inflation, an outstripping growth of aggregate demand, growth of unproductive lending, weak macroeconomic discipline and leaks. And on the supply side, this is a business environment with all regulatory and country risks, access and quality of infrastructure and staff qualifications. And in order to fight inflation, these causes need to be eliminated. The growth of aggregate demand is to be restrained,” says Sabit Khakimzhanov, adviser to the chairman of the National Bank of Kazakhstan.

The maximum rates for all types of savings deposits in August are set at the level of:

- on deposits without replenishment: 12.5% ​​- for 24 months, 15.2% - for 12 months, 15.5% - for 6 months and 15% - for 3 months;

- on deposits with replenishment: 11.7% for 24 months, 14% for 12 months, 15% for 6 months and 14.5% for 3 months.

The maximum rates on other types of tenge deposits remained unchanged, in the range of 9.2%-14% per annum.

“Tenge deposits do not overtake inflation so far, but the situation with dollar deposits is no better. Thus, the maximum recommended annual effective rate of fixed-term and savings deposits in foreign currency is only 1%. Inflation in the US is already above 9%. This has not happened since 1981. Inflation in other countries that form global demand is the same record high - 5%. Therefore, savings should now be oriented not only to currencies, but also to instruments,” commented financial analyst Ruslan Sundetov.

There are instruments which value depends on other underlying assets. For example, they include mutual funds (mutual investment funds), the value of which depends on the prices of their constituent shares, bonds and other securities. Mutual fund is a fund designed to accumulate money from investors.

Mutual fund typically raises money from investors to buy a security portfolio. This portfolio may include stocks, bonds and other sometimes complex instruments by different companies from different countries. Thus, the value of a share will depend on the price of the securities included in it. As a rule, mutual funds are invested with allowance for risks, therefore, they bring clients income above inflation, Ruslan Sundetov believes.

The threshold for entering a mutual fund for some managers starts from 20,000 tenge. “I would like to note that mutual funds pay dollar returns in tenge. Life insurance companies work the same way as well. Their endowment and investment insurance products also generate income today that covers inflation,” concludes the interlocutor.

Source: https://prodengi.kz/post/v-kakoi-valyute-vygodnee-kopit

Photos are from open sources.

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