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How have the investment preferences of Russians changed during the crisis

April 24, 2021 – M.B.A. Finance took part in the publication  Debt.rf 

Previously “forgotten” gold and cash are gaining popularity

The current crisis has seriously changed the investment preferences of Russians. As the results of a survey by the NAFI analytical center show, citizens are returning to the classic instruments of investing money – gold and cash in rubles. At the same time, real estate, although it occupies the first line in the investment preferences of Russians, is losing ground.

The number of proponents of investing in real estate is decreasing every year, according to data collected by NAFI. In 2020, this method of investing funds was called the most reliable by 40% of respondents, in 2022 – 33%. 36% of the study participants called real estate investments the most profitable this year, compared to 39% in 2020. At the same time, “square meters” still occupy the first place in the rating of investment preferences of Russians, despite the “cooling” of interest in this area, citizens still consider real estate the most profitable and reliable way to invest.

Nikolay Berzon, Research Director of the NRU HSE Department of Financial Markets Infrastructure, states that due to the high cost of housing, the “entrance” to this market is closed for most mass investors. But if someone has such an amount, then, probably, real estate as an investment object is suitable, the interlocutor believes.

As follows from the monitoring of Frank RG tariffs, the average mortgage rate as of March 17, 2022, is 21.55%. Sberbank issues mortgage loans (without benefits) at 19.8% per annum, VTB – at 23%, Gazprombank – at 24.1%, Rosselkhozbank – at 24.75%, Otkritie – at 22.99%. 

The second place among the popular ways of investing Russians is gold. In 2022, the purchase of precious metal began to be perceived by Russians as a more reliable way of investing: 25% versus 21% in 2020. About 26% of NAFI study participants consider gold to be a more profitable way of investing in 2022, two years earlier, 18% thought so.

Nikolai Berzon notes that in conditions of instability, gold always rises in price. This is confirmed by the current situation: in 2020-2021, gold cost about 4-4.1 thousand rubles per gram, after the start of a special military operation, the price of metal soared to 8.1 thousand rubles. But this is largely due to the weakening of the ruble against the US dollar, in which gold is valued on world markets, Berzon clarifies.  At the moment, the expert does not see the need to invest in this asset because the price is too high. Nikolai Berzon also does not recommend investing in physical gold – coins and bullion.

“The question arises, where to store cash gold? I would not recommend keeping it at home, as crooks have become more active. If you store it in a safe deposit box, then you need to take into account the costs of this safe deposit box. In addition, when physical gold is stored, any scratch, any dot can lead to the fact that this ingot depreciates by 20-30%. You need to be very careful. Or not to buy cash gold, but to buy impersonal metal accounts that can be bought at any bank branch,” the expert explains.

The TOP 3 also included the accumulation of money in rubles and their storage in cash, according to NAFI. In 2022, 23% of Russians called this method reliable, 19% called it profitable. In 2020, this point of view was held by 15% and 10%, respectively.

Nikolai Berzon pays attention to the fact that cash in the hands of citizens is not savings or accumulation. He notes that this money is needed in order to ensure a quiet life in unstable financial markets. Given the recent hype demand for cash withdrawal and difficulties with payment through some terminals, the expert considers it reasonable to have some cash on hand.

“Different experts give different figures for this reserve. Each person decides on the amount independently. I believe that it is necessary to have a reserve in the amount of six months’ expenses borne by the family,” says Berzon.

Among other relevant ways of investing money, Russians call opening accounts and deposits in a state bank. 21% of citizens surveyed by NAFI consider this method of investing reliable, 17% – profitable.

Young people aged 18-24 are more likely than others to note the reliability and profitability of buying cryptocurrencies. According to NAFI, in 2022, 23% of the participants in the study of this category declared the reliability of cryptocurrencies, 24% – their profitability. Among all respondents, 11% speak about the profitability of cryptocurrencies, 8% about reliability. “Over the past 5 years, the share of Russians who have heard about cryptocurrencies has increased 4 times (from 16% to 67%), and most believe that the value of cryptocurrencies will grow in the future,” NAFI points out.

Given the high volatility of cryptocurrencies (their prices change by 20-30%) Nikolai Berzon recommends considering this instrument only in the context of long-term investments. At the same time, he warns of two dangers associated with such assets: tightening of legislative regulation (the Bank of Russia insists on a complete ban on cryptocurrencies and mining) and fraud (inexperienced buyers are offered non-existent cryptocurrencies).

The experts interviewed by DOLG.RF also add debts to the list of investment methods. Such lots are traded on specialized platforms (for example, the DEBT.RF marketplace), and settlements are made in rubles. Sellers and buyers are legal entities and individuals.

According to Ivan Rykov, the founder of the marketplace DEBT.RF, the average return on investment in the debt market today reaches 20-30% per annum. For individual lots, the yield can be thousands of percent, but the process of collecting such debts is usually quite time-consuming and requires serious professional competencies.

Vachata, the CEO of M.B.A. Finance, believes that the debt market will actively develop, including due to the influx of mass investors into it. The withdrawal of foreign capital and the closure of trading on the exchange, the collapse of shares create an unprecedented opportunity for the development of new investment areas. And one of these areas is investment in the debt portfolios purchasing, Vachata says.

In a crisis and the need to quickly return funds to the turnover of the creditor company, the most obvious way out is to clear the balance of non-performing assets, the expert explains. As for potential buyers of debt assets, Vachata singles out debt collection companies. According to him, they are most interested in acquiring debt portfolios – this asset does not lose its relevance over time, the acquisition of rights to repay debts opens up opportunities for a different approach of work with debtors (discounts, promotions, payment schedules: all of these options are beneficial to both the owner of the debt and the debtor).

“Debt collectors often attract external investors to purchase debt portfolios. These are mainly large investment funds, companies, or owners of large private capital. Buying portfolios is considered a high-risk investment. A lot depends on the quality of the portfolio and the debt collection agency that will deal with debt repayment. But the risk is justified: with a competent approach to choosing a partner and evaluating the acquired asset, the investor has a good stable income,” the expert summarizes.

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