The use of a currency is as a medium of exchange, not necessarily as a store of value long-term. Yeah, you would want it reasonable stable in the short-term, but if holding cash is a bad investment, that doesn't mean that anything is wrong. It just means that hoarding cash is not a useful way to save.
Which isn't a bad thing for the economy. It is better for it if a person of means lends the money to the government or the private sector, or buys equities or other investments.
I don't know yet - still working on the problem. A few ideas below.
Cash (actual stuff you can hold in your hand, not the plastic stuff) in small denominations. A few thousand in 10's and 20's offers a lot of flexibility to deal with short term issues.
US treasury bills.
Dividend paying stocks, especially ones without a lot of global exposure. Not sure yet, but utilities might be good, but I haven't figured out the impact of interest rates which complicate that problem.
I'm not a fan of gold. It's hard to hold, harder to spend, but if currency valuations fluctuate wildly, a bit might be helpful, but only the stuff you can hold in your hand - a gold fund might not help much, but that's a completely different discussion that I'm not qualified to offer a good opinion on.
I'm keeping my money there since it's backed by the US economy. Yes, the value of the economy is lower than 6 months ago, and while likely be lower in a year.
What else should it be backed with? Dollars are subject to (hyper)inflation. Real estate is nice, but I need more liquidity.
Seems like owning a chunk of the economy is where the action is.
Cryptocurrency is certainly not a good place to put savings, as its price is way too unstable to be a store of value. If you're unsure about the value of the USD, then traditional investments like gold would probably be a better choice. Like other comments mention, even though lots of money was created for economic stimulus, it's used in such a way that makes it deflationary long-term (as seen by the projected 0.62% inflation rate for this year and only 2.24% next year[1]).
The counter is if you hold cash when other assets crash your cash will likely retain its worth (currency depending). That said right now cash is not a great asset to be holding - with inflation on the rise.
I'd like to know what to do with ~10 000 euros, right now. Where should I put it so it doesn't lose its value and keep a bit with inflation ?
edit for a bit of context: Western Europe, renting, unlikely to be able to buy/invest into a house/flat, looking at gold ingots, not the nerve for crypto.
If you put the cash into gold, real estate, stocks, etc. it will maintain most of its value if not grow faster. Even putting it into low-interest CDs would help you preserve most of it.
Generally speaking, it's a bad idea to use currency as a store of value. The unwavering stability of the almighty US Dollar is a massive historical outlier. For most of history the wealthy didn't keep Scrooge McDuckian piles of cash around, they converted their cash into hard goods and investments like loans, which won't evaporate if hyperinflation occurs. Even today, the smart thing to do is to store most of your value in liquid and semi-liquid assets.
The best place to put your money is typically where nobody else wants to put theirs. IMO nobody wants cash today. They want anything except cash no matter how risky. Stocks at highest valuations ever, BTC (unregulated), emerging market high yield, bonds with negative yields (because they think it will price appreciate), art, cars, volatility selling (fixed gains & unlimited losses), etc.
The least desired asset class right now is cash. Compare that to 2009-2011 or so & cash was the prized asset class which underperformed going forward. Aside from the least desired, the cheapest asset class in the world today is volatility.
I agree with your sentiment. I also keep quite a bit of money in cash, but these days I'm keeping less so since it seems likely we'll have high inflation in our future, given how much money is being printed. I've moved most of it to gold or silver.
Like a lot of entrepreneurs who are revenue positive, we have excess cash on hand. Given the crazy markets, we don't really want to hold equities and probably not most debt either (treasuries or otherwise). Where is everyone putting their money? Anyone tried foreign currencies (like Canada's or Brazil's)? How about gold? And how do you even make such investments? I know there are a lot of scammy companies out there peddling gold and currencies and would like a recommendation on who's trustworthy.
Where else would you keep your money though? You could hold cash in a bank, but the risk of the bank defaulting on it's custody assets is more than the risk of government default.
This is probably a really good time to invest in developing world junk bonds.
You don't save money by sitting on cash because your money is losing value rather than gaining it.
If your currency is deflating, usually that comes with a significant lack of confidence in markets. It takes an incredible amount of deflation to make investing a worse idea than hoarding - your currency would have to have become so incredibly scarce that the increasing demand for it outpaces real value of business productivity - but in the general case you are always making an informed choice between your money being secure - and the safest it can be varies by country. In the US, it is probably safest in an FDIC insured account, because you are more likely to have a safe in your house stolen and broken into than the bank and US government collapse in a way where FDIC insurance fails. But that is only 200k per account. There must be a threshold in any system where you stop insuring money - where you stop guaranteeing its safety - and you have to take that safety into your own hands.
In general, the least safe store of money is investment. Your investments could gain or lose all their value overnight, so it is risky. Next up is mutual funds, investment accounts, etc - ones that use the same risky pool but sample the whole thing to try to normalize the risk across the entire market. But entire markets can, and do, tank. Then you can put it in a bank - barring insurance, you are then trusting the bank not to go insolvent (through fractional reserve, which has the same investment connotations shares do), like they did in the great depression. If you don't have state insurance, bonds are often safer than banks because you are hedging against a countries solvency. And finally, you can keep it on your person - as long as you can keep yourself safe and secure, you can hopefully keep your money safe and secure.
In deflation, the fear is that the first three metrics of money storage lose their profitability potential sufficient to drive wealth holders to instead take money out of the economy and into their own safes. This drops the real money supply, and causes a deflationary spiral and more money leaves, money becomes scarcer, and people hoard more money. The endgame is that the currency stops working, because people start treating it like gold rather than a means of exchange - you hoard it because it is worth a lot, but you do not want to spend it because it will probably be worth more tomorrow.
The inverse problem is an inflationary spiral, where a money supply is seeing such an extreme glut of money entering markets that people are selling all of it off to try to offset its lost value, which perpetuates the drop in value. Unless it is backed by material goods (fiat moneys are not) inflationary spirals, uninterrupted, end at a worthless currency - nobody wants any of it because nobody thinks it is worth anything.
Governments create inflation to offset deficits, surely, but they also create inflation to avoid either scenario. But in general, inflation increases monetary velocity - the more inflation you have, the more value holding the currency you lose day over day, and thus the more pressure for you to get rid of it as fast as possible before you lose more value. You want to walk a tightrope between where people do not want to keep it and where people do not want to receive it, but usually low amounts of inflation are sufficient to get almost all money moving without compromising much confidence in its buying power, hence why every modern economy targets similar 1%ish inflation levels.
Deflation, on the other hand, slows down the economy by driving the desire to not spend money. Even 0% inflation - when the currency is simply stagnant - can be disastrous for an economy because it suddenly changes the game from "I have money and its worth less every second" to "I have money and it will be worth the same / more tomorrow than it is today". That can cripple economic cycles necessary to sustain countries.
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