Where should I put it?

How to save and increase your savings

Where to put something ... Last year's surge in inflation for many has become another reason to think about how to protect their savings. Fortunately, in recent years, quite a lot of investment tools have appeared. The New Times, together with analysts from financial structures, tried to figure out how to more reliably preserve and increase savings.

Most experts, analysts and strategists of the world's leading investment banks agree that the coming year will be characterized by sharp and strong multidirectional fluctuations in almost all markets. Two trends will come into conflict: "asset inflation" caused by a global excess of money will intensify due to the easing of US monetary policy, stimulating "bubbles" in the stock and commodity markets. At the same time, there is a growing threat that already inflated “bubbles” will start to burst, and any collapse of any of the segments of the global market can cause a “domino effect”, and a cleansing wave of the global crisis will sweep the world. For the next meeting of participants, which will traditionally take place in Davos in late January, the World Economic Forum has prepared a report stating that in 2008 the world will face the highest level of economic and political risks in the last decade. The threat of global asset impairment is in first place both in terms of probability and potential damage to the global economy - it could exceed $1 trillion. Therefore, when investing, one should not lose sight of this, and, as practice shows, it is during stock market crashes that one can lay investment portfolios, which then will be able to bring hundreds of percent of profit.

dollar or euro

Until recently, the most popular way to protect savings from inflation was in Russia to buy foreign currency. However, as the dollar weakened, this method began to enjoy less and less popularity - the single European currency could not occupy the vacant niche, largely due to the strengthening of the nominal exchange rate of the ruble both against the dollar and against the dual-currency basket (which includes the euro). Nevertheless, the question of whether it is time to buy dollars or euros is very relevant for many. According to most forecasts, the strengthening of the ruble will continue this year. Faced with the need to fight inflation by any means, the Russian Central Bank will be forced to sacrifice the interests of Russian producers and go for an even more serious strengthening of the ruble than what we observed last year. However, in the opinion of Yevgeny Gavrilenkov and Anton Struchnevsky of Troika Dialog Management Company, there will be no inflow of capital into Russia, similar to that recorded in the first half of 2007, and the growth rate of gold and foreign exchange reserves will decrease, which will make it possible to avoid a significant strengthening of the ruble for fight against inflation.

Despite the almost guaranteed strengthening of the ruble, it is not very reasonable to keep "all the eggs" in the ruble basket. As for the relationship between the dollar and the single European currency, there is little consolation for the owners of dollars. The factors that led to the fall of the dollar against the euro last year have not gone away. On the contrary, a new one may be added at the end of January. This will happen if the Fed continues a series of rate cuts at the next meeting and the ECB refinancing rate (4%) turns out to be higher than the US rate (currently 4.25% and the possibility of reducing immediately by 0.5% is being discussed). Morgan Stanley strategist Gerald Meineck generally believes that US rates will fall to 3%. Meanwhile, according to the head of the ECB, Jean-Claude Trichet, fighting inflation is a more important priority for Europe, so only the issue of raising rates is being discussed. Higher rates usually mean higher yields on government bonds, making euro-denominated bonds more attractive to investors than US Treasuries. Analysts from Societe Generale do not rule out a possible correction of the exchange rate to the level of 1.45 dollars per euro, but in the long term they are guided by the levels of 1.67-1.69. Finally, if we recall the WEF report, then the probability of a sharp collapse of the dollar was estimated at 3.5 points on a five-point scale, although many experts consider this assessment too pessimistic.

Stock

The largest participants in the Russian stock market are quite optimistic about the prospects for this year. On average, according to the results of the year, the main Russian indices are predicted to grow by 15–20%. Although this, of course, is not 70-80%, which showed Russian papers a couple of years ago. The most attractive sectors are trade and finance, communications, electricity and oil and gas sectors. However, the state of the Russian stock market is highly dependent on what is happening on the global stock exchanges. And there is much less optimism.

Eternal values

Today, in order to derive income from rising prices for oil, real estate or precious metals, it is not at all necessary to build an oil storage facility, buy apartments and land, and litter your home with gold bars. Specialized mutual real estate investment funds are actively operating on the market, banks open "metal accounts", and financial instruments linked to certain exchange commodities are available. Those who invested in commodity markets did not remain disappointed: oil tested the level of $100 per barrel at the beginning of the year, gold showed an all-time high, approaching $900 per ounce. The eccentric ex-ally of George Soros, Jim Rogers , who for several years has been calling for investing in commodities and predicting the collapse of the American economy, does not leave the screens of business channels, becoming one of the most influential investment "gurus".

Investments in gold look the most attractive. “With the development of stagflationary ¹ scenario, gold, being an alternative currency, is likely to perform well,” said Tim Bond, an analyst at Barclays Capital . agrees with him James Moore from TheBullionDesk , pointing out that the presence of geopolitical tensions and the instability of financial markets support interest in gold as a safe-haven asset (more recently, this function was performed by the dollar).

With oil, however, everything is not so simple. On the one hand, investment banks are increasing their average annual forecasts one by one. On the other hand, even after the increase, these forecasts are lower than the current prices. Thus, the consensus forecast of 29 analysts interviewed by Bloomberg for 2008 is at the level of $78 per barrel. In addition, if a recession in the US economy becomes a reality, this could significantly reduce global energy demand, which could trigger a collapse in the market. As for investments in real estate, they look the most vulnerable. It seems that this particular segment of the global investment market will become the first "bubble burst". Prices, inflated in recent years around the world, have already begun to fall in the US and the UK, and this process is likely to continue this year.

Morgan Stanley strategist Gerald Meineck, who analyzed the earnings of companies included in the S&P 500 index, notes in his report: economy in 1980 (however, they survived the catastrophe in 1982). This hour profits are 62% above the trend. If history repeats itself, and we do not see any reasons that can prevent this, in the near future we will see a sharp reduction in profits.” The fact that the US economy is on the verge of a recession is virtually certain at Morgan Stanley. Colleagues from Goldman Sachs also agree with them: The investment bank lowered its forecast for US GDP growth for 2008 from 1.8% to 0.8% and expects the rate to decline in the second and third quarters. This may lead to a deep correction of the American indices, which cannot but affect all markets, including the Russian one. The increased threat of a recession is also indicated by the speech of Fed Chairman Ben Bernanke last Thursday, in which Alan Greenspan's successor said: "The underlying outlook for 2008 has worsened and the risks have become more tangible."

“Our expectations reflect the growing confidence that the oil supply situation on the market will remain challenging in the medium to long term, coupled with rapidly rising costs for companies. Our assumptions about oil prices in 2008-2010 are quite conservative, and in reality they may be exceeded,” JPMorgan said in a report after raising its forecast for this year by 23 percent.

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1 Stagflation is a combination of stagnation and inflation