With data All-Russian Center for Public Opinion, currently 27% of Russians do not have savings. A year and a half ago, 64% of those surveyed admitted that they had no savings. These figures confirm that the Russians adhered to the saving behavior model during the crisis. Yet no one is immune from impulsive spending, especially after some disturbing news.
Anton Prokudin, chief macroeconomist at Ingosstrakh Investments Management Company, states that such acquisitions never lead to good.
“This applies not only to consumer goods and services, but also to durable goods. For example, the prices of apartments bought in panic in December 2014 or March 2022 fell even in ruble terms the following year,” he said.
Therefore, it is better to keep free money at least – to save, to the maximum – to increase. The main tools for this are now bank deposits and savings accounts, and in the stock market, federal loan bonds, conventional bonds and stocks.
You can also earn money by investing in real estate.
Save and increase savings
Interest rates on deposits and savings accounts are currently above actual and expected inflation at 12% per annum. With data The annual price increase rate of the Central Bank of the Russian Federation on August 7 reached 4.4%. At the same time, the current inflation in the last three months was 7.6 percent. Vitaly Kostyukevich, head of Absolut Bank’s retail products department, predicted that this figure would be 6% by the end of the year. Natalya Vashchelyuk, chief analyst at Sovcombank, added that “at a fixed ruble exchange rate, the peak of annual inflation could be -8.5-9% in mid-2024. At such a rate of price increase, a deposit and savings account will save you money.
Bank deposits are insured by the Deposit Insurance Agency. The deposit amount of up to 1.4 million rubles is fully returned to the depositor upon cancellation of the license from the bank. At the same time, the deposit conditions may include prohibiting the withdrawal of some of the money before it expires. Otherwise, 0.1% interest will be applied. The customer has the right to withdraw any amount from his savings account without loss of interest, and such investments are insured by the state.
“If large purchases are not planned in the near future, you can open a three- or six-month deposit. In general, a strategy of diversifying savings over time can also be applied. Now the highest rates are offered for short deposits – at 10-12% per annum for three months and deposits for three years, ”said Vashchelyuk.
Timur Aitov, Chairman of the Financial Security Commission of the Council of the Chamber of Commerce and Industry of the Russian Federation, pointed out that banks can offer flexible conditions for deposits and savings accounts (for example, they can lower the interest rate by 1.5%). 2 percentage points in a few months, so it’s important to review all conditions before opening an account.
Alexander Bakhtin, investment strategist at BCS World of Investments, says that by investing in the stock market, you can not only save but also increase your savings. The number of Russians willing to invest is increasing. According to the Central Bank, the total number of brokerage accounts reached 31 million at the end of the first quarter of 2023. This figure represents a third increase over the previous year.
The most reliable security
According to experts, the least risky instrument in the stock market is federal credit bonds (OFZ). Investment losses are minimal when using this tool.
OFZ is a government bond that entitles its holder to a guaranteed income, the amount and mode of payment of which is determined at the time of issue, as well as to receive its face value upon expiration of the loan.
The PRUE Associate Professor of Foreign Affairs and Municipal Finance said that the investor will receive the largest income if they hold the securities until full repayment. G.V. Plekhanova Mary Valishvili. For example, it appears on the horizon in three to five years.
Also, some issues of OFZ-n can be purchased at a discount to the face value, which will provide additional income to the user due to the amortization of the specified face value.
Prokudin said the return on long OFZs is now 11% per year. However, if the interest rate continues to rise, the securities will begin to depreciate and if you try to withdraw some of the money before the loan expires, you may enter negative territory.
The riskiest and most profitable option
Bonds are debt securities that give the holder the right to earn a predetermined income within a certain period of time, that is, the investor lends money to a company or government on the condition that this money is returned with interest on the specified day.
“In the bond market, it is better to give preference to “short” (with maturities of one or two years) issues from reliable issuers. Now their returns can actually exceed 10%.
Long-term bonds are more exposed to geopolitical risks, so investments in them are associated with higher uncertainty,” said Vashchelyuk.
Prokudin said that through a Russian broker, for example, you can buy more than 200 OFZ or three foreign currency bonds of Gazprom with a maturity of 2026 for 300 thousand rubles.
Prokudin explained that foreign exchange bonds with 8-10 percent yield in US dollars or euros can protect citizens’ savings due to the fact that inflation expectations in these countries are below 3 percent annually. However, the investor must be knowledgeable about currency pricing. It is unprofitable to hold these securities during the strengthening of the ruble – you can go to the red.
The most risky and at the same time profitable investment option is stocks.
These securities are issued by companies and give shareholders the right to receive a portion of the profit (dividend). In other words, everyone who acquires the share is considered its shareholder.
“Stocks are the main generators of long-term returns. It is optimal to invest in them for a period of three years. Some securities can receive regular dividends. You can get the maximum profit by buying shares in an individual investment account, which allows you to receive annual tax deductions in addition to the result of investments, subject to simple rules, Bakhtin said.
Investing in stocks becomes less profitable when the key ratio rises.
At the moment, there are ideas that can bring profit on the Russian stock market. Roman Chechushkov, head of investment analytics at Renaissance Bank, says these include share repurchase programs (Lukoil) and the expected return on dividend payments from metallurgists (MMK, NLMK, Severstal, Norilsk Nickel). According to him, you can evaluate the shares of Sberbank, NLMK, Phosagro.
How to make money in an apartment?
Real estate is one of the most popular investment vehicles. Kostyukevich said that 20-30% of real estate is purchased for investment purposes.
“Rent an apartment is a stable income. Resale of real estate is a possible option, especially when it comes to buying an apartment and a new building on the secondary market. “There is no reason to lower property prices so far,” he said.
It should be noted that the apartment requires constant investment. These are utility costs, repairs, and insurance if the home is mortgaged. At the same time, when buying an apartment in a new building, it is unlikely that it will be possible to rent it immediately.
It will take a year or two to wait for the delivery of the dwelling and make the necessary repairs. The benefit will come only from the possible increase in the price of the object.
Andrey Stolyarov, Associate Professor of the Department of Financial Markets Infrastructure at the National Research University School of Economics, said that real estate investments bring income, but do not protect against the devaluation of the ruble in the long run.
Valishvili added that for this reason, one should not rely on a visible profit. With the increase in mortgage rates and the decrease in rent demand at the same time, you will not be able to make a significant amount of money.
Stanislav Portnenko, Managing Director of the Department of Electronic Markets of Sberbank, emphasized that even a “working” apartment is unlikely to be sold in a day or two. But there is an option to “pack” it into a structure such as a closed-end mutual fund, which may have secondary circulation. This will allow the investor to actually buy/sell a real estate portfolio as quickly as possible and contribute to increasing their value.
What to choose for an investor?
Maria Saenko, vice president of the Otkritie Savings and Investment tribe, advised that before choosing an investment option, you should calculate the amount of mandatory expenses (food, flat and electricity bills, transportation, loan payments) and analyze their share in the budget. Bank. If the financial burden is small considering the mandatory payments, you should decide what purchases the family will need in the next three to four months and try to distribute their costs evenly over the period. The next step is to stick to this plan. Money for current expenditures can also “work”.
Kostyukevich believes that it is better to deposit a small amount (for example, 300 thousand rubles) for a short period of up to six months. Minimum risk, simple savings management and highly guaranteed income.
By depositing 300 thousand rubles for three months, you can thus receive an income of 8,227 rubles, and in six months 11,500 rubles. Vashchelyuk said that one- or two-year bonds from trusted issuers, or OFZs, can be a good option for savings for more than six months.
Much depends on the amount of free money the investor has.
“If it is less than 1 million rubles, it is better to deposit the money in bank deposits at different times. If the amount is too high, investments should be diversified. It is possible to send some of the money to securities, for example, bonds, in order to consider the option to purchase real estate, ”explained Kostyukevich.
Chechushkov believes that it is better for an investor to diversify the portfolio: for example, 60% of bonds, 40% of shares or 80% of bonds and 20% of shares.