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Thursday, October 27, 2016

How to save money in turbulent times

Russian financial market is in a zone of turbulence. CB inhibits the growth of economy, high-stakes, businesses due to expensive loans and geopolitics reduce the investment and save on wages. The income of companies and citizens are falling. In these circumstances, it is difficult to find reliable and promising tools for attachments. But they are there.

photo: Gennady Cherkasov

For a long time the most reliable tool to private investors was deposited. Today the generosity auction for investors that Russian banks arranged after the start of the sanctions of the West, was completed. Market leaders boast exemplary modesty. Every month the attractiveness of this tool falls.

At the end of August, according to the Central Bank, the average maximum bet top 10 Russian banks on deposits of natural persons in rubles amounted to 8.38% per annum, which is 0.42 percentage points lower than the previous month. At the current annual inflation rate in the region of 7% annual ruble deposits bring a penny of net profit. Ruble deposits now good mainly for savings, but not to extract income. It should be remembered that the most generous offers are usually the banks, which breathed its last. In the event of bankruptcy no problem you can return only the amount of 1.4 million rubles. Of course, without interest.

Deposits in dollars and Euro has long ceased to be a tool of earnings. Now it’s just a way to keep money without fear that they will be stolen. Now the average maximum rate of annual deposits in dollars — 1,41%, in Euro — 0,47%. According to the CEO Frank Research Group Yuri Gribanov, interest rates on deposits in Euro still has the potential to reduce and by the end of the year they may reach the zero level. Despite the low yields, foreign currency deposits are not out of fashion: according to the Bank of Russia, the share of deposits in foreign currency in their total amount in July increased from 25.7% to 26.5% the previous month. On 1 August the volume of deposits in foreign currency in ruble equivalent amounted to 6.2 trillion rubles. Experts explain the fashion for foreign exchange savings by behavioural change of citizens in the current year, the Russians prefer not to spend but to save, keeping the Deposit intact.

Buying of cash dollars and euros are still popular among Russians. And not only to those who are going on a vacation abroad. Currency is liquid: it can be sold quickly if you need rubles. Besides the liberal expert community and speculators continuously stir up fears. The result is crunchy on dollars and euros continue to be perceived by many as a good investment. The only risk of this type of investments, the strengthening of the ruble. But looking at cheap oil, and given the policy of the Central Bank and the high probability of increasing the key rate of the fed at the end of September, this is unlikely.

Now is a good time not only to buy foreign currency, but also to improve housing conditions. Many developers are willing to do discounts and offer special programs, including installment payments. But still a huge number of new houses stand empty. This is especially noticeable in some areas of the suburbs. Fell investment interest in new buildings in Moscow (with the exception of the most running goods — “odnushek” in the metro stations). According to the “IRN-Consulting”, now 1 “square” of the economy in the primary capital market from the Third transport ring and the MKAD on average sold for 150,4 thousand. If you search, you can find cheaper ones for 20 thousand.

And although Deputy mayor of Moscow Marat Khusnullin said recently that housing prices in Moscow to decline not, believe in it with difficulty. The main reason for pessimism is the low solvency of customers. According to the statistics of Federal state statistics service, the number of transactions on both the primary and secondary markets of Moscow steadily falls, and the proportion of registered mortgages is increasing. Most people have no free money, and they are forced to buy apartments with borrowed money. The construction market is kept afloat thanks to the state program on subsidizing mortgages.

One of the most reliable assets for saving and accumulation of funds in the current year was gold. Starting in 2016, the price of this precious metal rose by almost 25%, from $1060,5 to $1318 per ounce. The trend is simple: in the beginning of the year the US stock market rattled investors transferred their money into protective assets, primarily in the “Golden” safe Harbor. Well-known speculator George Soros in the first quarter invested in assets related to the gold market, approximately $390 million (of which $264 million spent on the purchase of shares of the canadian gold mining company Barrick Gold). It was followed by large hedge funds.

According to experts, the purchase of shares of gold miners is one of the most intuitive and easy for ordinary investors, investments in precious metals. Companies have the power, resources, markets. The other instruments have more disadvantages than advantages. So, anonymous of mescita — a tool for long-term investment, moreover, OMS is not included in the Deposit insurance system. In the case of revocation of Bank’s license was crying your money. Bars are expensive to store in safety Deposit boxes and keep in the nightstand is dangerous, plus this kind of investment is subject to VAT. In addition, the price of bullion falling, if they have been scratched. Income when buying or selling bullion coins often eat the fee of the conciliator (the price of gold on the market and in a Bank is markedly different). Commemorative coins — lot of coins. Gold futures require special knowledge.

Experts advise to pay attention to gold ETF funds (Exchange Traded Fund). They resemble shares in a closed mutual investment Fund. But unlike Fund shares, these shares can be freely bought and sold on the exchange through a broker operating on foreign stock markets. Financial analyst of “Finam” Timur Nigmatullin has identified a number of advantages gold ETF funds: high liquidity (shares can be sold quickly), the minimum difference between the purchase price and sales, profits can be obtained even with a minimal growth of the price of gold, there are no charges for storage. In addition, shares of such funds provided real physical gold stored in a safe world banks. However, there is a “gold” ETF, and disadvantages — they are traded abroad, foreign currency transfer funds to a brokerage account and withdrawal from it is sometimes implemented with a delay. With minimal amounts of frequent purchases and sales the cost of the minimum exchange Commission may substantially reduce the yield. In addition, the investor must master the terminal of the trading platform.

We will add that usually gold rises in troubled times, on expectations of uncertainty. Especially when analysts write about the strengthening of inflation expectations or of factors of depreciation of the dollar against other major currencies. Platinum and palladium are industrial metals, so they respond to a negative background, the opposite — lower prices. Because of economic instability, falling industrial demand, particularly in the automobile industry, where both metals are widely used. The same can be said of silver, which is necessary for electronics manufacturers. Now investing in silver, you can count on a modest return.

The study of current yield financial instruments, such as a secondary question, respondents believe “EV” experts. The main thing — the purpose and possibilities of the investor: income, capital, age, the ownership of property, the degree of risk. “Elderly people or close to retirement age, it is advisable to adhere to conservative strategy. For them, the most important reliability investments, so they usually do not pursue high profits, and prefer conservative instruments, such as Bank deposits, purchase of real estate, investments in gold, primarily in the “Golden” EТF. A good pension Supplement could be shares of companies carrying out a generous dividend policy”, — said Nigmatullin.

Young people Director for strategic development UK “the alpha-the Capital” Vadim Loginov recommends to focus on long-term investment. “Now is the perfect option for investing money for a period of 3 years or more is an individual investment account (IIA). To stimulate long-term money, the state is subject to a 3-year horizon provides a tax deduction of 13% on investment amount up to 400 thousand rubles a year. This substantially increases the return on investment. Under IIS you can choose different directions of investments, from government securities to corporate bonds and shares. Shares of Russian companies — “blue chips now trading at a large discount and have a very high growth potential”, — said the expert. “The hen that lays Golden eggs, will always go up faster than the eggs. In other words, the value of the business will always grow faster than the value of the goods and services that the business produces or provides,” said renowned investor Warren Buffett.

Since the beginning of the current year the MICEX index increased by 13%, ahead of inflation. Experts have documented the growing interest in mutual Funds, mainly funds of the mixed investments and bonds. First draw a flexible investment strategy, the second to the expectations that the Central Bank in September will reduce the key rate. Deputy General Director for investment analysis of IR “Zerich capital Management” Andrey Vernikov believes that the stock market for investment in the long term are interested in buying shares of banks. Interesting as rouble deposits in banks and purchase non-elite apartments, especially by the state program.

And in closing I recall a quote from the Talmud, which has not lost its actuality: “Let everyone share their money into three parts and put one of them into the ground, the second and the third let him keep in reserve”.


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