What will I do with my money?
Yesterday’s statement by the CBRT tells us that interest rates will stay at this level for a while. However, rising policy rate does not prevent deposit rates from going down. And people are trying to save money by buying goods or services whose prices are expected to increase in the near future. The current level of deposit interest rates does not stop consumption. This situation will also lead to further deterioration of pricing behaviour and naturally, CPI will remain high.
Accordingly, it is unlikely that inflation rate will drop below 45% this year. In the best-case scenario, the current policy rate means zero real interest. Depositors will succumb to inflation because deposit interest rates were below this level at the beginning of the year. It is only natural for them to buy foreign currency or gold, put it aside and wait for it to rise slowly, or turn to stock or real estate investment. “Inflation makes our money melt. What should we do?” is the question on everyone’s mind.
As there is only a limited number of people in Türkiye who are capable of saving money and the fact that people keep spending money due to the monetary policy that causes their savings to melt away should absolutely not be considered “success”. Meanwhile, some people still want to buy a house or a car despite the high lending rates. I would like to ask them this: “Do you actually believe that the value of the product you purchased will increase satisfactorily enough that it will be worth the trouble you have gone through when you reach the halfway point on a mortgage or loan you have had?” In fact, I am asking this question also to those who use their foreign currency savings for investment. Will these investments into which you put your savings and loans you took out at high interest rates satisfy you in the future? Unfortunately, many people, seeing their savings melt away when remain in the form of cash, become upset and engage in investments that they will regret later.
It might be useful to consider the way how people with such investment habits lead their lives: The majority of businesses in Türkiye are family businesses employing less than ten people. This means that the money of the business is the money of the family and vice versa. They do not want to overcapitalize their businesses since it can lead to low profitability. On the other hand, they want to use their profit and assets correctly so that their business can grow.
On the other hand, there are people who are not business owners but have put some money aside. And these people are worried too because they do not want to be in a position of need in the future. They make investments today so that they have enough savings in their old age. Buying a house is not easy anymore. A middle-income family can no longer afford today’s house prices. The era of saving money by buying a car is also over.
Before making an investment decision, you should ask yourself: “What kind of life do I want to lead?” Do you want to buy a house in a place with beautiful nature or buy a land to build a house on it and spend the rest of your life there? Or do you want to travel the world in one backpack? To do both, you have to have a serious amount of savings. It is not possible to do any of those things with the money left after expenses, especially if you are a simple wage earner.
You need to diversify your income sources if you do not want to spend the rest of your life stuck in one place. Even if you are a wage earner, you need to be able to turn your skills and knowledge into money. This can help you grow your network and broaden your horizons in way to discover opportunities, which would also mean that you will be staying active until you die, which isn’t bad at all.
But, if prefer peace and calmness over action, then you need to be patient. It is not easy to find a real estate where you will live happily during old age. First, you need to be sure about the habitat you would like to live in, and accordingly find the land that will suit the building that matches the house plan you have in mind. Then you will build your house with patience. Some could try to trick you into selling your house but you should not listen to them. There is no guarantee that you will find a better one after you sell it. Also, consider the expenses of the property you purchased. If you are not certain that your future income will definitely cover such expenses, don’t do it. People who once made this mistake sold their homes and moved to more modest houses due to rising property costs.
People who have the necessary financial means prefer buying a house abroad. That is a wise choice of investment. But remember, if you have a house somewhere, you could feel obliged to live there, which could leave you little time to explore other places on Earth. Do not do it either if you will not be able to spend enough time with your children while trying topass an inheritance to them. Because no amount of money in the world can help them make up for the lost time with you.
So, in conclusion, take your current and future lifestyle into account when making investment decisions. Nothing is perfect, so prioritize your wants. Do not envy what others do, achieve or have. Engage in investments that will make you happy and that will not cause problems for you in the future. Try to enjoy life as much as you can in a world where you do not know what may happen next.