There is a general belief that there are few favorable savings opportunities, and those who want to invest their money in a very favorable way find it more difficult to find a favorable solution.
The main reason is found in the central bank base rate, which stands at 0.9% (as of August 2016), with interest rates on loans and deposits decreasing accordingly.
Bank interest rates have clearly been favorable, and if you want to take out a loan, you should take advantage of the opportunities as both installments and APRs are at a record low. For example, we have previously written on our blog that the average APR on Hungarian home loans has been falling for over 3 years and analyzed current offers .
That was the good news
However, the opposite is true for investment. With the decline in the central bank base rate, interest rates on loans and deposits tend to fall, as the cost of funds is getting lower, so it is not worth paying a premium to save customers and the cost of loans is getting lower. However, interest rates – and therefore what it is worth investing in – are determined by the bank’s business policy.
Why invest then?
The question is, if the yield is not outstanding, why turn to investments, securities or open a savings account?
From the very outset, if we have about $ 5 million or less in savings, what can we invest in it? In the current situation, buying real estate is the most obvious, but due to the huge price increase, we cannot reasonably invest in real estate below HUF 15-20 million.
It is worth considering that it is not worth keeping more cash at home than many people do. In the event of a burglary, we can say goodbye to our entire savings, to the results of our many years of work, or to our heritage. No matter how much cash is stuck at home, we will always worry about it.
And if you already bring it to a financial institution
hat we always know how much interest we can expect.
A final argument to those who feared for their money is that the National Deposit Insurance Fund will pay compensation in the event of a bank failure, so that no bankruptcy threatens the success of our investment.