Having our capital in a bank deposit is a good decision when the economy of the country is going backwards but the currency that supports the country depends on the economy of other countries.
This is the case, for example, of the Spanish situation when bubble exploded, where deflation was beginning to take place and the euro gained more strength, as the European Central Bank's policy was to gradually lower rates until they reached 0.
Nowadays, having our capital in a bank deposit is to give wings to the banks, when situation is completely different from 10 years ago.
The risk of an economic crisis in the European Union is barely low and it seems that steady economic growth is taking root.
Just after the crisis in 2009, the risk was very high although the worst had already happened and with the bags so low it would have been worth putting our money in the bag.
When panic spreads and alarms go off you have to have the radar to buy and when the situation is good to have it to collect benefits.
All this I speak in the thread of good investor keys.
As soon as we get our money in euros in our case, we could have our capital in another currency.
Although it is always desirable to move money to places where it is generating wealth.
If we were like Uncle Scrooge accumulating dollars the only thing we would do in the long run is to lose money as the dollar depreciates over time.
However the precious materials maintain their value since they have also rise with inflation so they maintain the price.
That is why if the coins were real gold they would have added value to the nominal as precious metals which would keep or raise the price over time.
Euro as well as dollar, fortunately is quite stable, in spite of it has been years to drift, the best is still to come.
There is little time for the rate escalation and revaluation with respect to other currencies to begin.
I say this because there are a lot of currencies and there are countries where people had their money only in the local currency could have lost everything as Venezuela and many African countries.
But in those countries they worry more about these things and do not live like in Europe where we do not believe this could one day happen.
I say this because there are a lot of currencies and there are countries where people had their money only in the local currency could have lost everything as Venezuela and many African countries.
But in those countries they worry more about these things and do not live like in Europe where we do not believe this could one day happen.
But what happens if the price of the money happens to be worth more with respect to the other goods by a raise of interest rates.
That said, what are interest rates? .
Interest rates are modulated according to the rate of inflation.
The real interest rate is the nominal return or nominal interest rate of an asset discounting the loss of value of money because of inflation.
Its approximate value can be obtained by subtracting the inflation rate at the nominal interest rate.
Therefore, the nominal interest rate, which is usually the amount of interest in credits, would include both the real interest rate and the inflation rate.
When the nominal interest rate is equal to the rate of inflation, the lender gets neither profit nor loss, and the value returned in the future is equal to the value of money in the present.
The lender wins when the interest rate is high and inflation is very low or nonexistent.
An inflation rate above the nominal interest rate implies a negative real interest rate and, as a consequence, a negative return for the lender or investor.
From the point of view of the monetary policy of the State, a high interest rate encourages savings and a low interest rate encourages consumption.
This is why in Europe after the crisis and low unemployment, families have less purchasing power and find it more difficult to spend.
For this reason and so that it does not affect quickly all sectors, central bank has to stimulate the consumption by what low the rates.
Accounting that, money begins to be worth less and everything in general reduces its real value with what it loses after these artificial measures of the banks are those that own the capital.
However, wages are also reduced because the profits of the companies diminish leading to a new status.
On the other hand, at the beginning of these measures, those finite global assets such as materials, in particular precious metals, increase in value with respect to foreign exchange.
Hence the state intervention on interest rates in order to encourage either savings or expansion, according to general macroeconomic objectives.
Many people just care how much they earn without knowing that euros or money is something subjective that depends on many factors.
It is not the same 1 dollar 20 years ago today. In fact, the dollar has lost value over time, as well as an ounce of gold in the 90s with an ounce of gold today.
So in addition to having our money in euros, we could well have it in another currency or another precious metal, gold, silver, diamonds.
Next, I will show an explanatory chart comparing these metals with other currencies or material goods over time.
As you can see the silver is now consolidating values and following patterns of other economic crises to deduce that it will be long stable in those values.
In my opinion it still has to be corrected in the next two years to stabilize around the $ 12.
In the case of diamonds the bullish trend is uncorrupted and will continue to rise for quite some time.
Let's talk about gold.
In the 1990s the difference between the cost of production and the nominal cost was quite low having a rather low profitability.
However in recent years has witnessed a boom ending at the end of the crisis. At the time of price stabilization and adjustment of rates began to correct value until the
Range of the $ 1200 currently listed.
The current cost of production is around $ 800, making production really cost-effective. Here is a chart that compares the cost of production with the value of gold.
In this way it is also seen that as its value increases it costs more to extract it but the profit differential increases.
In favorable economic seasons the investment in gold is a mistake since in revaluing the other currencies and generate interest gold loses value since it only rises by the mere fact of raising inflation.
Although in the whole market the precious metals adjust to market before the events occur and the speculation is quite high.
In addition to all this we must make special mention of the cryptocoins that would merit a complete thread to talk about them.
At the moment most famous is the Bitcoin that after an initial impulse in 2010 has not reappeared with force until 2016.
Right now it is gaining special prominence due to the huge increases recorded in the first months of 2017.
To the right attached a Bitcoin chart compared to the recent dollar gold.
In addition to Bitcoin there are numerous cryptocoins that correct errors of Bitcoin as the space of transactions that in the case of Bitcoin is enormous.
The most famous are Ethereum and Ardor , since February of this year they have revalued more than 1000% , going from 10 $ to 250 $ at the moment.
This space that traces all the movements from the origin without a good optimization would end up dethroning Bitcoin as a crypto-currency in the future.
So the question is, what is the best way that our saved income does not lose value with the passage of time?
The best answer would be to have a balance in what we have saved, and not put everything in the same bag.
As in the thread of the keys of the good investor is not to invest in the distribution of our capital in
Different sectors and relocating these investments to minimize risks per zone in the case of our real capital would go in the same direction.
With this also say that it is not true that gold is revalued above the dollar except when adverse events arrive.
So it is advisable not to exceed 10% of our capital in precious metals and when revalued by bad economic cycles sell is the best option.
Since if today gold is worth 3 times more dollars than 30 years ago but the dollar is also worth almost 3 times less with what more or less has remained stable.
When banks give interest for our money do that because they are earning more with it.
So even though we think that we are earning a current 2% -5% the truth is that we are losing money.
This will happen in a few years as soon as types go up. Currently, money is worth less and in addition prices are rising with what we are losing capital year by year.
And the companies that will receive loans more easily is also a point to take into account although where less would invest would be in companies that carry a high debt with the difficult time to lower since the benefits will be reduced considerably.
Companies that have not done well in financial matters are at risk of being swept up by rate rises.
It also affects those who have an interest rate-dependent mortgage, such as the Euribor rate, which can be adversely affected.
While houses depending on where they are located can gain value in the face of good economic cycles.
Another matter is one that invests your money in a mortgage, is it really good business?
Depending on the amount of the mortgage or bank loan, and from where it was purchased may be a good option.
More if you are living in a home that is not ours. Many think, rather than pay the owner I become the owner and payment to the bank and at least the money goes to the house.
This is not entirely true, since we have to take into account the monetary policy that is going to be and if the area where we have bought will be more demanded in the future.
Apart from this we will have to add the interest that we are going to pay the bank with the years that can get to surpass 100% of what was worth the house in the beginning,
(Although the money will have had its revaluation over time).
From my point of view, in Spain after the flat price of housing, few sites have revalued above other sectors of the economy.
Although this increase is due in large measure to the exaggerated depreciation of properties that have an intrinsic value for the area where they are.
Housing for me is a basic good that we should all be able to access and that we must evaluate when choosing a job or not.
Many people, sin of innocent to think that the work is for the whole life, unless it is a position of official. So buying a home is more an investment item.
A point of view when buying is also very determining is to compare the prices of the rent with those of the purchase of houses.
If they are very misfit in favor of the purchase perhaps this is the right thing to do but you have to see where they are turning.
Right now because of the puncture of the bubble are getting more things in favor of the purchase.
If you want to pay a mortgage or if you want to pay a rent and invest the capital somewhat different.
Currently the price of houses is being revalued around 5% on average in large cities.
In the case of making this important transaction, I would have more than half prepared to pay, and I would do something that is not overvalued at the time of purchase.
A really interesting fact to know how things are would be to compare the CPI with the current housing price.
In the following chart we can see how in 2015 the soil was established and the entire previous bubble was corrected.
If the area where the work environment is located does not give affordable options, and the rental price exceeds 30% the salary maybe the logical thing is to look for a job in another area.
Not to see barbarities as they have been done around Madrid, buying real estate for values that touched the average salary of 30 years because the rents came to around 80% of the salaries.
Sometimes it is better to know a little of economy before working, or to have common sense, which in our society is in decline, hence what is happening.
We have seen people who were negative return after work, accounting for overall expenses.
The companies are doing around 20% on average in the stock market and the currencies have not yet started to take off.
Banks in the last two years have risen almost 100% in market value from lows (after the oil crisis in early 2015).
Despite that 100% rise, it is true that 4 years ago they were at current levels, and I estimate that in another 3 years they will revalue another 100% until reaching historical highs
Therefore for me the safest investment is to have a large part of portfolio in stocks of banks, but not to the current values as they will be corrected soon.
When the IBEX approaches the 10,300 points good time of entry , 15% Fibonacci recoil.
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