We will try to find an answer to the question - what is more profitable, savings in foreign or domestic currency?
First, we will analyze the foreign currency savings option, which we find the most common for several reasons.
Foreign currency savings in euros
Foreign currency savings in case you have 1,000 euros that you can live without for the next year:
- The average effective interest rate offered by banks shall range between 0.26 and 0.43%
- 15% capital gains tax shall be paid on the interest earned, which shall be calculated and deducted from the interest by the bank
- Inflation rate in the euro zone for 2016: 1.1%
- Real return on invested funds: -0.84% to -0.67%
Thus, it is obvious that despite greater security, saving in foreign currency is not really worth it at the moment.
Dinar savings
Savings in domestic currency if you deposit RSD 100,000:
- The average effective interest rate offered by banks is between 2.00 and 3.60%
- No capital gains tax is paid on the interest earned
- Inflation rate in Serbia for 2016: 1.6%
- Real return on invested funds: 0.40 to 2.00%
Conclusion
It follows that saving in dinars is far more profitable for our citizens. What makes saving in RSD unattractive is the distrust of citizens who have been "burnt" several times in the past. We must remind ourselves of the year 1993 and the famous monthly inflation of 5 x 1015% (prices doubled every 16 hours) which brought all citizens with fixed incomes, especially employees in state-owned companies, pensioners, and recipients of state grants, to beggar pole. Let’s recollect that, for example, back then, a 200-gram package of mustard cost a whopping 500 billion dinars.