The main question today in Egypt which all people are looking for an answer is how am I going to save my money’s value which is dropping since 2016?
In my opinion people in Egypt could be classified to 2 groups:
Group A: Employees and Retired “Fixed Income Owners”
Group B: Business/Small Business Owners & Freelancers “Non-Fixed Income Owners”
The main options people are choosing from to save their money’s value in Egypt are:
4- Certificates of Deposits
Since its impossible to get any currency with the current official exchange rate and it will be meaningless to buy any currency with unofficial exchange rate as in case the official exchange rate moved it will remain with the same value you bought it with so its not a good option to choose
Its not a bad option for people from Group A, but just in case you have extra money from savings that you will not need in 3 to 5 years since already gold is currently priced based on a higher currency value than the CBE’s valuation, BUT a very important note these days!! Cash is king and any increase in living expenses may affect your savings plan if it’s not planned realistically.
Same as option 2, but In my opinion its a better option since you might be able to catch a good opportunity with a good price for an apartment that could be rented too and in this case its better to get an existing apartment and keep in consideration that cash is king.
Definitely, buying a certificate of deposits with 14% return while the inflation is greater than 16% and the Egyptian pound value already losing 25% of its value against the USD and expected to lose another 15% to 20% makes this investment not a smart option to choose.
It was mentioned before that the stocks values are based on companies assets so in case there is a change in the official exchange rate and the assets value of the companies increased the stocks values will increase but it didn’t work as mentioned in the Egyptian Stock Market and already the EGP lost about 25% of its value.
Assets values increased but I don’t think we can find a company in which its shares increased by 25% for this reason. In addition, a very important point in my opinion is that all companies are looking for ways to preserve their capital value during this period.
One way of doing that is buying treasury stocks, which increases their capital but from individuals trading the share. In the end, in case this option is the best suits you so better choose a mutual fund in order to avoid being played with as a weak individual investor.
As for Group B, although these people are facing a bigger risk but at the same time they are better lucky to compensate as freelancers can raise the value of their services which an employee or retired person cannot do.
As for business owners, I think its better for them to focus on their business stability nowadays, they can also stock items they can quickly sell after moving the official currency exchange rate. Factories can stock up on raw materials and this is the best way for Group B to preserve their money’s value in case its applicable according to the type of product or service provided.
At the end the question was where would I invest $500/EGP 10,000?
According to the above mentioned explanation:
I am now from Group A and I have $500/EGP 10,000 so I have 5 options.
If I have them in USD, I will keep them in USD or buy the new offered certificate of deposits in USD.
In case I have them in EGP, I will choose a mutual fund to put my money in so I can withdraw them anytime in case the currency exchange rate changed and the return of the certificate of deposits was raised above inflation rate.
I don’t think waiting for years to gain return on gold or stocks is a good option now and EGP 10,000 will not get me an apartment 🙂
This will bring me to the final note I want to mention before finishing which is I hope we can find real estate and gold mutual funds in Egypt soon as they are a very good opportunity for people to invest their money and will attract a whole new category of people with small investment budgets.
Hope I was clear 🙂
This was not written by Thndr and this is not investment advice, you should do your own research before making investment decisions.