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How to protect savings from devaluation?

Tenge will be 26 years old this year. The specialists of life insurance company Freedom Finance Life tell how Tenge has been becoming cheaper and how to protect their savings from devaluation.
How to protect savings from devaluation?

Until the second half of the last century, the value of money was tied to gold, so that the paper bill could be exchanged for precious metal. Over time, the state began to reduce the gold content of bills and they gradually gave less gold for them. Then it was called devaluation. Today, this term has a different meaning - the depreciation of the national currency to foreign ones used by the state as reserves. If we are talking about the devaluation of Tenge, this means that its rate is falling against US dollar and Euro.

In November 1993, Kazakhstan had its own currency - Tenge. During its existence, it went a long way, switched to a free-floating rate and fell 80 times - from 4.69 to 377.6 KZT per US dollar. In total, the national currency experienced four open devaluations. During each, it became cheaper by an average of 47% (or 70 KZT against US dollar). The record depreciation occurred in the 2nd HY 2015. Then Tenge cheapened by 95.8% (179 KZT) for several months - from 186 to 365 KZT per US dollar.

During the devaluation of 1999, Tenge cheapened by 50.3% against US dollar (43.6 Ttenge). In 2009 and 2014 Tenge cheapened by 24.3% (29.4 Tenge) and 17.6% (27.3 Tenge), respectively.

How Tenge was cheapening during devaluations




Rate increase

March–June 1999

86.75 ₸

130.36 ₸


January–March 1999

121.27 ₸

150.73 ₸


January–March 2014

154.96 ₸

182.31 ₸


July 2015–January 2016

186.8 ₸

365.83 ₸







According to the National Bank of Kazakhstan

Issued for Freedom Finance Life

Devaluation is not a crisis phenomenon. From an economic point of view, this is a fairly common “tool”, thanks to which the state can regulate many economic processes, for example, increase export earnings and domestic goods attractiveness.

However, there is a reverse side. Devaluation reduces the value of people’s savings and purchasing power, increases inflation and forces people to give up deposits in exchange for foreign currency deposits. This negatively affects the population’s quality of life and creates fear of possible exchange rate fluctuations.

According to the survey conducted by the National Bank in March 2019, 63.6% of respondents expect Tenge to fall in price in the near future against US dollar. This figure is much higher than the average. Thus, over the past few years, on average, 51% of respondents expect that Tenge against US dollar will become cheaper, 10% believe that Tenge will strengthen, and 15% believe that the rate will not change.

The stronger the fear of possible depreciation of savings, the more often Kazakhstani people think about how to keep their savings. However, not everyone has this opportunity. According to surveys by the National Bank over the past three years, on average, only 20% of Kazakhstani people have personal savings. Most of them prefer to keep money in bank deposits (62%) and cash (30%). Only 7.9% of respondents prefer to invest in real estate and only 2% in securities.

Where do Kazakhstanis keep their savings?

What Kazakhstani people invest in

Average rate, %

Deposit in bank




Real estate








Investment in business\ household\ production




Goods\ non-deteriorating supplies


Precious metals


According to the National Bank of Kazakhstan

Issued for Freedom Finance Life

As for the currency in which the population prefers to save, 78% of Kazakhstanis prefer Tenge, 29% save in US dollars, 7.3% in Russian rubles and 5.7% in Euros.

How to protect the savings from devaluation?

To protect your savings from inflation and possible devaluation, first determine your goals, time frame and willingness to take risks. It depends on how and where to invest.

If you want to create a financial reserve for the family in case of unforeseen situations (illness, job loss or unplanned purchases), tools with a fast access to money will do, for example, bank deposits. If you want to increase capital, securities are the best option.

Some tips to help protect the savings from devaluation are as follows:

1. Keep money in multiple currencies.

If you keep all your savings in Tenge, they will be devalued. And if all the money is stored in dollars, you can lose on exchange adjustments when buying or selling currency. The best option is to keep savings in multiple currencies. Proportions depend on your goals and expenses. If all your expenses are in Tenge, then it is better to keep most of the savings in national currency, the rest - in USD or Euro. And, for example, you save up for education in China, then it makes sense to convert part of the savings into the currency of this country.

2. Keep a portion of your savings in deposits.

According to the National Bank, inflation in Kazakhstan was 4.8% in March 2019. To protect your money from it, make it work. The easiest and most affordable way is bank deposits. Their yield exceeds official inflation: for example, the return on Tenge deposits is up to 11%, and USD - 1%.

Deposits are best suited in three cases: if you are not knowledgeable in more complex financial instruments (for example, investment activity); you need to create a financial reserve and, if anything, have an easy access to it, or you are ready to invest for 2-3 years, but afraid of risks.

Deposits is a relatively safe financial instrument with minimal risks.

3. Buy securities.

Securities can bring higher returns than bank deposits. However, this financial tool is not suitable for everyone. First of all, the stock price often changes, so it is necessary to constantly monitor their value, so as not to go into the red. Secondly, stocks are good in the long run and not suitable for creating a financial reserve, it is not profitable to keep a money supply in case of emergency in them. Thirdly, it is worth investing only when you already have a financial reserve.

However, if you are not afraid of risks, ready to track the value of shares and find a reliable broker, investing in securities will be the best option. Besides, if you invest in shares of foreign companies, their value will be in foreign currency. This guarantees not only greater profitability, but also protection of your savings from devaluation.

Securities are best suited for long-term passive investments.

4. Invest in precious metals.

Investments in precious metals can bring even more money, because return on them can be much higher than on deposits.

However, there are many details that complicate investing in these assets. Firstly, the cost of precious metals, as a rule, depends on the speculative price. This means that it is more difficult to predict prices, for example, for gold than securities. Secondly, to invest in these assets, we need experience and knowledge.

Investing in precious securities is best suited for experienced investors.

5. Make a life insurance policy.

Universal life insurance is a “mix” of deposit and accident insurance. Such policies are concluded for a long term (3 years and more), and provide not only accumulation, but also insurance protection for the entire term of the contract. The profitability of such programs may be higher than that of other financial instruments. For example, the return in foreign currency under the Freedom Capital program is from 3.1 to 3.28%, more than foreign currency bank deposits.

This policy works the following way: you form a contract under selected terms and pay the contribution to insurance company. If during the contract term the insured event occurs, the company will pay an amount that is much more than what you have paid. If the insured event does not occur, at the end of the contract term you will receive your contributions back plus investment income.

The payments are pegged against US dollar in programs with indexation. For instance, you have entered into a 10-year insurance contract and paid a fee in the amount of 1,900,000 KZT, which is 5,000 USD at exchange rate of 380 KZT per dollar, for 10 years the accumulated amount will be 6,901 USD (investment income of 1,901 USD). On the contract expiry you will receive a payment in KZT with indexation at the rate that will be in the future, that is, if devaluation happens during this time, and USD becomes more expensive, you will get much more than you have paid.

A life insurance policy is the best choice if you want to not only save money, but also protect yourself from accidents and unforeseen expenses.

There are many ways to protect your savings from depreciation. And each is effective in its own way and works for specific goals and objectives. For example, deposits are good for creating financial reserves and protecting against inflation, securities are good for long-term investing, and universal life insurance is effective not only for creating a financial reserve, but also protecting against unforeseen situations.

The main thing you need to know is you do not invest all money in one thing, it is better to distribute it between several financial instruments. Keep money in several currencies, open several different deposits, try to invest part of money, and spend another part on issuing a life insurance policy. You will protect your savings and yourself this way.


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