Saving Money During a Crisis: 5 Ways to Protect Your Savings

Contents:

• How safe is it to keep money in rubles?
• How to create a currency portfolio?
• Where is the best place to exchange currency under the new rules?

How safe is it to keep money in rubles?

Analysis shows that the ruble is not an optimal means of storing capital. Over the past two decades, its value has fallen significantly compared to major world currencies. For example, over the past 24 years, the ruble has weakened against the dollar by 350%. This highlights the risks associated with using the ruble as a long-term investment instrument. Investors should consider alternative currencies and assets that can provide greater stability and capital protection.

The ruble, even in stable times, demonstrates high vulnerability as a currency. Yulia Afanasyeva, an analyst at Finam, emphasized in an interview with Skillbox Media the need to develop strategies to protect savings from potential devaluation in advance. Effective precautions will help minimize risks and maintain financial stability in a changing economic environment. She believes that in today's market, saving in rubles will only be advisable if sanctions are lenient and oil prices rise. It's important to keep in mind that the economic situation is subject to change, and investors should closely monitor oil price movements and the political climate to make informed financial decisions.

Yulia Afanasyeva emphasizes that Russians should not completely rely on the national currency to protect their finances. In an unstable economic situation, it is important to consider alternative ways to preserve and increase capital. Investing in various assets and instruments can help minimize the risks associated with currency fluctuations. It is important to remember that diversification of financial investments can be the key to security and stability in the future.

How to properly form a currency portfolio?

Creating a currency portfolio is a key step to achieving financial stability. Experts recommend that the share of cash, including both national and foreign currencies, within a conservative investment portfolio be between 10% and 30%. This range depends on the frequency of asset purchases. In the 1980s, American economist Harry Browne introduced the concept of a "perpetual portfolio," which includes equal shares of long-term bonds, gold, cash, and stocks. This strategy remains relevant and in demand, and many investment funds, such as Tinkoff, offer their clients similar solutions for building a reliable currency portfolio. Developing a balanced currency portfolio helps minimize risks and maximize returns, making it an important tool in personal finance management. Not everyone has the opportunity to engage in active investing. A key aspect of financial well-being is having a financial "safety cushion." According to recent surveys, only a small number of Russians are able to save 100,000 rubles, which, given the average salary of approximately 55,000 rubles (as of September 2021), presents a significant challenge. Building a financial cushion not only helps you cope with unexpected expenses but also provides confidence in the future.

According to independent financial expert Maria Cherepneva, the optimal size of a financial cushion should be between six and 12 months' income. If you are confident of quickly finding employment after being laid off, you may want to consider reducing this reserve to three monthly salaries. For families with children, it is recommended to create a reserve equivalent to a year's income, which will help ensure financial stability in the event of unforeseen circumstances. Building a financial cushion is an important step toward financial independence and risk protection.

It's important to understand that creating a financial cushion is especially important for those who are already investing in the stock market or are just starting out. Having a cushion helps avoid the need to urgently sell assets during times of crisis, which can negatively impact investment returns. A financial cushion protects your investments and allows you to make more informed decisions.

It is recommended to distribute your currency as follows: 50% of the amount should be kept in rubles, and the remaining 50% should be divided between dollars and euros. The optimal option is to allocate 25% of the total amount to dollars and euros. This approach will help effectively manage the risks associated with exchange rate fluctuations.

Maria Cherepneva notes that the optimal options for maintaining a financial cushion are deposits with withdrawal options, savings accounts, and cards offering interest on the balance. This approach will ensure quick access to funds at any time, which is especially important in unforeseen situations. Selecting highly liquid financial instruments will help preserve your savings and ensure their growth.

When choosing a currency, it is necessary to base it on a clear financial plan that includes effective personal finance management. Financial consultant Yulia Afanasyeva confirms this approach, emphasizing the importance of a strategic approach to choosing a currency to achieve financial goals. The right choice of currency can significantly impact the preservation and growth of capital, so it is worth carefully analyzing current economic conditions and prospects.

Where is the best place to exchange currency under the new rules?

As of March 9, 2023, the Central Bank of Russia introduced new rules regarding the purchase and exchange of currency. Finam analyst Alexander Potavin emphasized that the sale of foreign currency for rubles is now unlimited. However, access to the purchase of cash currency at bank branches will be closed until September 9. These changes may impact the currency market and investor behavior, which should be taken into account when planning financial transactions.

If you need non-cash currency, you can purchase it on the exchange through a brokerage account. Please note that the commission for transactions with the dollar, euro, and pound sterling is 12%. It is also important to note that, according to the new rules, currency purchased after March 9, 2023, cannot be withdrawn from the exchange.

Potavin offers effective methods for purchasing currency. The best options include using the exchange or opening a foreign currency account at a bank. In these cases, the current exchange rate may be more favorable than the market rate, especially considering the 12% commission. Choosing the right method for acquiring foreign currency will save you money and maximize your profits.

The introduction of numerous bans by the Central Bank of the Russian Federation has led to the emergence of a black market for cash currency. In most cases, the exchange rate for cash dollars and euros is based on the exchange rate plus a 12% commission. There are also ways to obtain cash dollars and euros through cryptocurrency transactions, but it is worth noting that such methods are currently illegal. The situation on the foreign exchange market requires a careful approach and awareness of the risks associated with illegal transactions.

Alexander Potavin is an analyst at Finam. In his work, he analyzes financial markets and provides expert advice to investors. With a deep understanding of market trends and economic factors, Potavin helps clients make informed decisions. His analytical reviews and forecasts are an essential tool for those looking to successfully manage their investments. In a constantly changing financial landscape, Alexander Potavin's expertise plays a key role in achieving financial success.