Currency for savings. Which currency is best to choose?
Dwain Ross
17 / March / 20
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Currency for savings. Which currency is best to choose?
Having looked at the most popular options and learned the opinion of experts, we were able to determine which currency is best suited for the accumulation of personal savings. First of all, you should consider the national currency, because each of the options has its pros and cons.
If a person receives a salary in hryvnias and plans to spend their savings in that currency, then no exchange losses will be required. Deposits placed in national currency are higher than in foreign currency deposits. Despite the fact that the return on deposits in the currency has increased recently, the national currency still wins on this issue.
The disadvantages of the national currency are that it is quite volatile. If you even look at the hryvnia against the dollar over the last decade, you can see for sure. The inflation rate is quite high.
Foreign currency - savings in dollars
The dollar is the most convertible currency in the world, used in most global financial transactions and transactions. It is also a major reserve currency for many Central Banks, which guarantees the stability of the dollar. The dollar is weakly prone to inflation and its value is independent of short-term trends.
But the downside of accumulating money in the dollar is also enough. Among the main reasons why this currency is not always the most appropriate are:
loss of money in conversion operations from national currency to dollar and back;
restrictions on foreign currency that may be imposed in the country during different economic waves, which can prevent changing a large amount of money when needed;
the dollar is the most counterfeit currency in the world, so there is a risk of paper rather than accumulation;
always in times of unstable times in the country there is a risk that public authorities will impose restrictions on the use of foreign currency;
dollar deposits have a rather low interest rate on deposits.
Only by weighing all the pros and cons for yourself, you should choose whether foreign currency is suitable for personal savings. Also, the dollar is not the only foreign currency in which it is popular to store savings.
European currency - what are pitfalls
The euro is a fairly stable currency, despite the turmoil in the European Union. In theory, the value of the euro does not depend on the economic situation of the individual country of the European Union. In practice, the situation is somewhat more complicated, as the state of production in large countries may affect the economy of the entire European Union. However, the euro's currency remains stable.
Cons are significant factors. First of all, there is no common financial regulation in the Eurozone, although the currency is one. There are other disadvantages common to any foreign currency, such as restrictions on its use, which can be introduced at any time in the country. The euro also has a minimum rate when compared to the dollar and the national currency.
Exotic currencies
The biggest advantage of exotic currencies is that the person who will be able to correctly choose the currency independent of the influence of other countries, will be able to reliably save their savings. But the disadvantages of exotic currency must also be taken into account.
Such money is usually difficult to exchange - if dollars and euros change in any exchangers, then exotic currency will have to be sought. It is even more difficult to open a deposit in such a currency - it is necessary to save money either under a mattress, or to look for foreign banks for deposit. It is also not necessary to study the currency and if the person is not well-versed in the financial sector, this may not be the easiest task.
In addition, it should be noted that, given the arguments for and against each currency, one should not look at their weight, but their weight. Although the dollar and the euro have their disadvantages, stability is the most important factor. From a financial point of view, people always save their savings in three currencies - the national currency, the dollar and the euro. This helps minimize the risks and is a guarantee of saving money if something goes unexpectedly in the country's economy.
Some experts, when diversifying their currency portfolio, recommend choosing the dollar as their primary currency and saving 50% in it. The dollar is a strong enough currency that is not subject to sharp changes in the exchange rate. Exotic currency experts do not advise to choose novices in financial affairs. Subsequently, when the experience of finance comes, it is possible not to discard the currencies of other countries, but to save money with them with some care.
