High prices are really crushing Czech families. Compared to last year, we pay more for accommodation, energy and food. Also, high inflation quickly devalues our savings. Experts then advised how to protect the money.
Inflation has taken a big bite out of Czech savings lately. Experts predict that in the autumn it could even be around 20%. “Current inflation leads to rapid devaluation of money,” said Czech National Bank (ČNB) governor Aleš Michla.
How to protect money?
Therefore, people have become more interested in how to protect money from inflation. Experts recommend capitalizing the money in interest-bearing bank accounts. “For the conservative Czech Republic, building savings are a suitable solution. In addition to the annual state support of up to 2,000 crowns, the contracts concluded today also offer very attractive interest rates on deposits. For example, in October this year, Buřinka offered an above-standard interest rate on deposits of 2.5% per annum, which was further guaranteed after a period of at least six years,” said Jana Žáčková from hyponamir.cz.
It is also beneficial to invest. “There are many options. From real estate to various securities to precious metals or alternatives in the form of cryptocurrencies. Each of these investments has a different degree of risk and expected return,” Žáčková added.
The popularity of gold is high
According to experts, Czechs trust precious metals, in which they love to invest. However, people should choose the best certified investment gold bars. These come in different weights and can easily be sold if needed.
“For many, gold is a symbol of security and insurance against the worst of times. While money can lose value very quickly in the event of war, hyperinflation or a financial market crash, gold retains its value.” Žáčková explained. However, when investing, people need to take into account fluctuations in the price of gold, which can often be significant.
What to invest in?
Experts recommend considering three fundamental parameters before any investment. And this to the expected return, riskiness and liquidity of the security. People need to take into account that the higher the return they expect, the more risk they have to take.
“Fixed-rate government bonds and high-quality corporate bonds are the least risky. You know in advance how long you will be investing the money and what the interest rate is. In general, mutual funds that invest in money market instruments and bonds also have a lower risk rate,” experts said.
In the case of longer-term investments, it is advisable to look at the offer of mixed and equity mutual funds.
Is it worth investing in real estate?
The market prices of apartments, single-family houses and building land have risen sharply in recent years. According to Eurostat, residential property prices have increased by an average of 121% since 2010.
“In addition to appreciation in the form of an increase in the market price, investing in real estate also brings additional income when you rent it. Currently, mortgage interest rates are high, and many families prefer renting. The greatest demand it is also reflected in the rent amount,” Žáčková said.
How to invest?
You can invest a larger amount of money at once or regularly in smaller amounts. “If you decide to invest, don’t forget to spread your savings across different types of stocks and assets. With proper diversification, you will help reduce your investment risk,” advise experts. Before investing, it is also necessary to know the investment horizon, i.e. the period during which people will not need their savings.
People buy apartments as an investment. However, they remain empty:
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