Sunday 27 September 2020
I wrote – Yasmine Selim:
Within a few days, the map of investment instruments that give the largest return in Egypt changed after the Central Bank decided to cut interest and after the National Bank and Egypt suspended the high-yield certificates.
During the Monetary Policy Committee meeting last week, the central bank surprised the banking market by cutting the interest rate by 0.5%, to 8.75% on deposits and 9.75% on lending.
The central bank’s decision comes after the National Bank and Egypt decided to stop issuing a savings certificate with a return of 15%, which used to give the highest interest in Egypt.
Until a while ago, investment in savings certificates was one of the best tools that give returns on money, along with other investments such as gold and real estate, but with the low interest rate and the effects of the Corona virus, these data have changed.
Economic analysts with whom Masrawy spoke said that investing in savings certificates is still suitable for the current economic conditions, noting that some other investment tools are currently suffering from high risks, which affects the investment process.
According to Islam Mekdad, an expert at Prometia, a company that specializes in corporate risk management and credit operations, the rates of savings certificates in banks still give an adequate return, and they are risk-free.
Lamasrawi said that the current return on savings certificates ranges between 12 to 12.25%, which is an appropriate return, and in light of the low rate of price inflation, this return is considered positive.
During the month of August, the annual inflation rate was recorded at 3.6%, which is the lowest rate during 2020.
According to Miqdad, for example, Nasser Bank allows certification for people over the age of 60, with interest in the range of 15%, which is still a high-yielding investment.
Mekdad advises people who have more money than need and are willing to bear the risk of loss, with investment funds, indicating that there are many types depending on the person’s risk tolerance.
This is also advised by Muhammad Abu Bakr, an economic researcher, who says that people should look for savings containers with a relatively high return in order to collect their benefits in the long term, adding, “If a person is of middle-income earners, it is preferable to look for an investment fund to invest with relatively low risks and near returns. Fixed “.
According to Abu Bakr, people should diversify their investments so that the risks are lower, for example, part of savings certificates and the other part in gold or something else, indicating that the percentage of investment diversification varies according to the person’s orientation and willingness to take risks.
He adds to Masrawy that Al Qaeda says that if you get a higher return, you will have to take higher risks, and this is under normal circumstances, but under the current circumstances and the impact of the Coronavirus on investment, the risks will be too high.
This rule applies to investing in gold, which is a type of speculative and high risk, because the factors that control it are many and volatile, but its returns are higher, according to Abu Bakr.
Islam Mekdad describes investing in gold as being used to hedge risks more than investment, because it is associated with large costs such as storing and verifying the type of gold that is ingots and not gold crafts.
International gold prices witnessed a rally that extended to about 4 months, starting from last April, to surpass the price of an ounce at the beginning of August, the level of $ 2000 in the global stock exchanges, achieving historical levels not reached before.
However, prices retreated during the same month, fluctuating in the following period between 1900 and 2000 dollars, before witnessing a remarkable decline in recent days, as an ounce broke the $ 1900 barrier.
According to Miqdad, the return on investment in real estate is in two matters, either buying in order to sell and benefit from the difference, or buying for rent.
He adds that the sale is currently stopped in the real estate market in light of the real estate developers providing facilities to investors, and the rental yield is less than the return from bank certificates currently.
Mekdad considers that rent can be a good solution for offices and shops, but the impact of the Corona virus has greatly affected demand.
Mohammed Abu Bakr considers that investing in real estate is a traditional market, with many price distortions and imbalances in supply and demand, and it could be a good investment in the medium or long term, not immediately.
Miqdad provides some advice to investors through Masrawy, as follows:
– You have a good amount of money and you do not have knowledge of investing in the stock markets – the stock exchange – and bonds. Invest in savings certificates in banks.
– You do not have money when you are young, go to insurance companies, where they will deduct a part of your salary to insure, for example, the risks of losing a job.
– An elderly man and you have money to rely on to meet your living needs, go for savings certificates in banks that offer 15% interest to the elderly.
An elderly man with money in excess of your needs invested in investment funds, but at a rate commensurate with his ability to bear risks and losses.