The situation with the ruble is becoming a little tense. Not only professional investors, but also ordinary people are beginning to think about what currency to store their money in in order to better protect themselves from rising inflation. Next, we will consider the options for the most profitable investments in currency in 2020.
Dollar
Traditionally, the dollar is perceived as a highly reliable currency. But in 2020, the position of the “American” may be shaken quite significantly. There are several prerequisites for this:
- overly aggressive foreign policy - trade wars with China and intervention in the Middle East - leads to so-called de-dollarization: more and more countries are looking for ways to reduce the turnover of dollars in foreign trade;
- The next negotiations on raising the US debt ceiling may be difficult;
- The President's attempts to stimulate economic growth by pressuring the Fed to lower the exchange rate.
The most important threat to dollar positions is a possible technical default in September 2020 on Treasury bonds. Trump cannot agree on a budget with the administration and refuses to raise the debt ceiling. If the contradictions are not eliminated, then the Fed will simply have nothing to pay for its obligations. But even if the situation improves, the acceleration of public debt in the long term will still work against the United States.
But this does not prevent you from keeping the dollar as your main currency in your portfolio.
If we do not consider the pessimistic scenario with a default, then the price guide for the dollar will be about 75-80 rubles.
Dollar exchange rate for the last year
Answering the question in which currency is it better to store money, in any case, it is not worth considering only the dollar as the main currency for purchase in 2020.
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How to protect ruble savings during a crisis
Here's what the experts advise.
Do not buy dollars and euros at the peak of value
One of the first signs of the financial crisis in Russia is the rapid rise in the dollar exchange rate. Ruble savings are melting before our eyes. Naturally, many rush to urgently buy currency. But its price is already high...
Of course, it was necessary to buy currency earlier, and not at a time when its price had already increased.
According to venture investor Yegor Klopenko, by converting ruble savings into dollars and euros, you can not only not make money, but also lose money. At least on the exchange rate difference.
It’s better to accept the loss, wait until oil prices rise and the ruble strengthens, then buy dollars and euros with an eye to the future period of devaluation.
But for those who do not want to wait, but hope not only to protect their savings and make money on exchange rate differences, experts advise not to buy cash dollars.
“Those who still want to take advantage of the situation should under no circumstances buy cash currency, because they need to invest at minimal cost. The only option not to lose money due to bank commissions is to open an account with a broker at the minimum rate and trade currencies on the exchange,” says Sergei Romanchuk, head of operations on the foreign exchange and money markets of Metallinvestbank.
The expert advises not to succumb to the herd instinct and try to be aware of the risks. Trading currencies during periods of exchange rate fluctuations is not a safe activity. “Most likely, non-professionals will be late when the time comes to sell currency,” says Sergei Romanchuk.
See deposit rates at VTB Bank - more details →
Don't invest in gold when its price has risen
In turbulent times, gold has always been a safe haven asset. But when buying precious metals, there is the same danger as when dealing with currency. The price of gold may already be at its maximum. Just like when buying dollars, you need to seize the right moment.
According to senior information and analytical analyst Anna Bodrova, investing in precious metals is only suitable for very patient people who are ready to receive a significant return in five years.
“Gold by itself is not capable of protecting personal investments, but it will definitely help reduce risks. Buying precious metals works great as a tool for protection against market fluctuations and diversification of a personal investment portfolio. To put it simply, part of the money should continue to be kept in foreign currency, part in rubles, part in shares of mutual funds, and part in gold,” advises Anna Bodrova.
Anna Bodrova does not recommend buying physical gold - in addition to the fact that it is expensive, banks are very picky about the appearance of the bars, so they can often only be sold at a discount.
“It is better to invest in gold and silver using financial instruments or investment coins, rather than opening metal accounts, since the exchange rate for them is very different from the exchange rate and banks earn huge commissions,” says the scientific director of the business incubator of the Financial University under the Government of the Russian Federation "Chapai Hub" Ilya Buturlin.
Do not buy unnecessary household appliances - they will become obsolete
No one can predict when the crisis will end. It can drag on so long that the family “airbag” is not enough.
“You shouldn’t buy household appliances, laptops and other things you don’t need. Remember that all this becomes obsolete not only physically, but also morally. More modern models will appear, and those who bought for future use will have an outdated, irrelevant item and envy the owners of the new one,” says Olga Zakirova, Candidate of Economic Sciences, consultant and methodologist of the project to improve financial literacy “yourfinance.rf”.
“The crisis may drag on, but money is always needed, and it is better not to make thoughtless and unnecessary expenses now, but to leave money for the future. Those who spent it now will regret it later, but not you,” the expert emphasizes.
See also: 50 most profitable deposits today - review →
Euro
The situation with the euro has stabilized in recent years. The euro is in slow motion against the dollar, rising and falling in a narrow range. Analysts predict the euro to strengthen to 1.15-1.17 against the dollar against the current 1.10-1.12.
Today in Russia it is not very profitable to have deposits in euros - banks offer a paltry 0.01% -0.1% per annum. However, to save capital, you must have at least 2 positions in your foreign exchange portfolio. If the first is the dollar, then the second can be the euro.
Positive factors contributing to the possible growth of the euro in 2020 are:
- weakening of the dollar and ruble;
- good production indicators in the flagship economies of the Eurozone;
- reduction in energy prices - almost all construction of gas pipelines from Russia to Europe has been completed;
- low risks in the economy due to stable prices and low inflation.
Euro exchange rate for the last year
But at the same time, negative factors must be taken into account:
- the weakness of individual economies - Greece, Italy, Spain - which can provoke a domino effect when they “collapse”;
- political tension caused by the desire of a number of entities to gain independence (Catalonia, Scotland);
- trade and sanctions wars with Russia, which cost the European Union no less than they do for us.
For 2020, experts predict that the euro will rise to 75-85 rubles according to an optimistic forecast, and to 85-95 according to a pessimistic forecast. According to the pessimistic forecast for the euro itself, it may weaken to 60-65 rubles.
Yuan
When thinking about which currency is best to store money in , pay attention to the East. In recent years, Russia has been actively developing relations with China. It seems logical to include some yuan in the foreign exchange portfolio in anticipation of its future growth. Moreover, many banks now offer opening accounts in Chinese currency - with a yield of 0.15% to 4%, which is more profitable than the euro.
There are many positive growth factors for the yuan:
- China is one of the strongest economies in the world, and even the trade war with the United States could not “crumple” the yuan exchange rate: it grew by 7% in 2020, despite all the negative background;
- China plans to stop paying in dollars when buying oil from the Middle East;
- in 2020, the yuan was recognized as a global reserve currency, and its accumulation by the central banks of many countries began.
RMB exchange rate for the last year
At the same time, there are no visible negative reasons for the depreciation of the “Chinese” exchange rate. The only risk that investors need to keep in mind is the strong dependence of the value of the yuan on political decisions. That is, the yuan exchange rate is strictly regulated in accordance with the needs of the economy. So, now the Chinese currency is artificially weakened against the dollar in order to boost foreign trade. And if the dollar weakens, then the yuan most likely will too.
In addition, “strong-willed decisions” of the party are not excluded, which can move the course where it needs to be, depending on its own needs.
Storing savings in securities
This method is not only a storage method, but also an option for increasing funds. Another thing is that such investment is subject to serious risks. Over time, bonds and other types of securities can lose significant value in value due to inflation or other adverse economic events.
Securities include:
- Shares of various companies;
- Bills of exchange;
- Bonds;
- Documents for property, as well as insurance.
When storing funds in shares, the investor, as it were, participates in the activities of a specific organization. That is, he has the right to acquire part of the property of this organization.
A bill of exchange is the most profitable type of securities. Income from a bill is formed from the difference between the price on the date of purchase and the amount on the maturity date. Bills of exchange can be cashed ahead of schedule at any banking organization. In this case, until the moment of repayment, the bank itself becomes the holder of the bill.
We can say that storing funds in securities is a long-term investment. If such storage is carried out with the right and reasonable approach, then investing in securities brings good profits.
Yen
The Japanese currency is a safe haven for investors investing in Asian currencies. Of all the eastern countries, Japan has the most consistent and thoughtful monetary policy, so the movements of the yen are generally predictable - which is especially good for trading using technical analysis data.
Positive factors ensuring the growth of the yen in 2020 include:
- the success of the Japanese economy, which is growing at a small but stable pace;
- 95% of Japan's debt is in the hands of domestic investors, which protects against speculative actions with the yen exchange rate;
- Japan is one of the world's largest creditors, including the 2nd largest holder of US government debt (after China), so it is not profitable to rock the economy of the Land of the Rising Sun from the outside;
- The country's trade balance has been consistently positive for 40 years and has doubled over the last decade.
Yen exchange rate over the past year
The large-scale artificial weakening of the yen ended long ago; at the moment the exchange rate is stable and is exclusively market-based.
GBP
After the shock Brexit, the British currency is slowly but surely recovering. Of course, prices have not yet reached their previous levels, but investors are quite optimistic about the future of the pound. The British economy is developing steadily, and many large investors are looking for salvation from the fall of the euro in the pound. Therefore, if you are wondering which reliable currency is best to store your money in, consider a Briton as a candidate. Currency advantages:
- stable British economy;
- the pound is undervalued - by all indicators it should be worth more, so it has room to grow, and this can happen at any time, the currency is quite volatile;
- high return on deposits - 1.5-3% per annum versus 0.5-1% in the Eurozone.
Over the past year, the pound managed to fall significantly and also rise significantly. However, the topic of Brexit remains relevant and is far from over. So investing in sterling is potentially very profitable, but the share of sterling in the portfolio should not exceed 25%.
Pound sterling exchange rate over the past year
The only significant risk remains Scotland's secession from the United Kingdom. In this case, the fall of the pound will be comparable in effect to Brexit. The British opposition is pushing for the abolition of the monarchy, but this is unlikely.
Storing funds in electronic currencies
This is a fairly popular type of money storage. To open an electronic wallet, you just need to go through a simple registration procedure.
pros
- Quick replenishment of your wallet;
- Possibility of quick removal;
- Transfer to any currency;
- Pay for purchases in a few minutes.
Minuses
- Not everyone knows that electronic wallet systems exist;
- Possibility of hacking and theft of funds;
- Availability of commission for transactions.
Swiss frank
The Swiss currency is a traditional European safe haven. In Russia, such investments are considered exotic today, but savings in francs are growing every year. In contrast to the unpredictable euro, the Swiss exchange rate is growing relatively calmly. Moreover, when the Eurozone begins to shake, many investors are looking for savings in the Confederation currency.
In other words, conservatives view the franc as the main alternative to gold. Moreover, in contrast to gold, the franc is becoming more expensive relative to the dollar: over the past 5 years it has grown by 13%.
Positive factors that allow you to invest profitably in the Swiss franc are:
- stability of the Confederate economy;
- high level of confidence in the Swiss banking system;
- relative independence of the franc exchange rate from news that concerns the Eurozone as a whole.
Franc exchange rate over the past year
Another plus is that in the near future the Swiss authorities hope to cope with deflation and abolish negative bank deposit rates. This will cause an influx of funds into the country and, as a result, an increase in the value of the franc.
Storing savings in a safe deposit box
Many people, fearing fluctuations in currency exchange rates, given geopolitical tensions, withdraw their savings from banks and prefer storing them in safe deposit boxes. To what extent this method can be considered effective and safe, we will discuss further.
Safe deposit boxes, according to bank employees themselves, are increasingly in demand among the population. Some wealthy clients of banking organizations close deposits and place money or valuables in safe deposit boxes.
An additional motive for such storage is the desire to increase security measures in case any restrictions are suddenly introduced on the circulation of funds in foreign currency.
As far as the issue of security is concerned, the situation here is twofold.
Example . Citizen O. sold the apartment. From the bank he was supposed to receive funds in the amount of 25 million rubles, which the buyer deposited in a safe deposit box. Having visited the bank office to withdraw the money, it was discovered that all the funds had disappeared and the cell remained empty. Citizen O.’s shock is probably hard to even imagine.
Based on this fact, the citizen contacted the police, where a criminal case was initiated. During the investigation, it was established that the cell was opened using a professional master key. It turned out that such a case is far from the first. The bank employees, of course, kept silent about this fact.
The banking organization did not admit its guilt in this situation; the case went to court. Moreover, the court took the side of the bank. Everything ended in favor of citizen O., he managed to return the money. But how much time and nerves it cost. As a result, the bank's license was revoked.
What can this example teach? First of all, a safe deposit box is not the safest option for storing funds. Secondly, you need to read the agreement with the bank very carefully and pay attention to whether the bank is responsible for the contents of the cell.
Other options
Let's think about what other currency can you store money in in 2020? If the standard options of the dollar, euro and British pound sterling, as well as the safe havens of the yen and Swiss franc, do not suit you, then an excellent option would be to invest in undervalued currencies that have good growth potential. According to Russia.Today, these currencies include:
- Israeli shekel;
- South African rand;
- Indian rupee;
- Polish zloty;
- Mexican peso.
Undervalued currencies of the world
Interestingly, the ruble was also mentioned in the review. Deutsche Bank considers a fair exchange rate of 17 rubles to 1 dollar – i.e. The ruble is undervalued by more than 73%.
It should be noted that these currencies are quite difficult to buy from banks. It’s easier to invest in them on the currency section of the Moscow Exchange or purchase cash through exchangers.
Keeping savings in a bank
If a person or family plans to make a major purchase, take a vacation, or pay for children’s education, it turns out that the money should be safe for a long period. In such a situation, part of the funds can be left at home, and the rest deposited in the bank. Most often it is recommended to open a deposit. Let's see what the expert community advises us on this matter:
- This storage method will not allow you to spend all the accumulated money;
- Thanks to the deposit, funds are protected from the effects of inflation;
- The risk of losing money is minimal. For example, if the amount of your savings is or exceeds 700,000 rubles, then it is better to divide them in half and place them in different banking organizations. But before that, you need to make sure that the selected bank is included in the state deposit insurance system.
Now let’s decide which type of deposit to choose. This will depend on what operations will be performed on this deposit. For example, if you open a classic deposit, you will not be able to replenish your account. It will not be possible to withdraw money from an open account, that is, you will have to forget about these funds for the entire opening period. But it is precisely this deposit that brings maximum income to its owner.
The second most popular is a long-term deposit with the possibility of replenishment. Their main advantage is a higher level of profitability and a fixed bank interest rate for the entire term of the deposit.
Next, we will consider the proposals of a number of Russian banks for opening deposits.
