10 shameful questions about money: financier Pavel Komarovsky answers

In this series Articles by well-known experts answer questions that are usually embarrassing to ask: it seems that everyone already knows about it, and the questioner will look stupid.

This time we spoke with Pavel Komarovsky, an economist and author of the RationalAnswer channel. You will learn how to stop living paycheck to paycheck and why mortgages are good.

1. Why, in principle, the dollar is growing, while other currencies adjust to it?

The dollar is the global reserve currency. It produces most of the international payments, and it is accumulated by the central banks of other countries in foreign exchange reserves.

The U.S. dollar first became an important international reserve currency in the 1920s because it was largely unaffected by World War I and the United States received an influx during that period.

gold from the countries directly involved in the war. After the Second World War, which again did not affect the territory of the United States, the American economy finally became the strongest and most stable in the world. And during the Bretton Woods Agreement (1944-1976), the dollar firmly strengthened on the pedestal of the world's main reserve currency.

Governments around the world seek to keep their reserves in US debt securities, because, firstly, this market is the most voluminous - it can be quickly and efficiently invest billions of dollars. And secondly, in comparison with the debt of other countries, the US public debt still looks the most reliable: in finance textbooks, such investments are even called “risk-free”.

The exchange rate of the dollar, like any other currency, is formed primarily from the ratio of supply and demand.

Demand for the dollar, for example, grows if everyone on the world market wants to buy more and more goods for this particular currency. Or if investors massively seek to invest in dollar securities. In this case, the dollar will strengthen. Supply also plays a role here: for example, if the US Federal Reserve starts to increase the volume of dollar money supply too quickly, this can lead to a weakening of the dollar.

It is almost impossible to accurately and reliably predict the future dynamics of the exchange rate. Even professional economists and exchange analysts with their forecasts get into trouble more often than they guess - not to mention ordinary people.

2. Is it worth taking loans or is it evil?

A consumer loan is when there is no money, but you really want to go on vacation, buy a new phone or something else. That is, roughly speaking, to take other people's money and just spend it. It's mostly evil.

First rule healthy relationship to finance says: you need to have an airbag that, in case of unforeseen circumstances, will allow you and your family to live without income for several months, or even a year.

And consumer loans carry the opposite idea: not only do you not have money set aside, you also get into debt.

When it comes to credit cards, interest-free grace periods look nice on paper - but cost a little. do not calculate and miss at least one payment, as you will be required to return the maximum percentage rate.

If you abuse credit, it is very easy to get into debt: this is a situation where most of your salaries goes to repay loans, and their volume due to constantly dripping interest does not decrease.

3. Are mortgages bad too?

No, it's a completely different matter. A person does not just spend the money received from a mortgage loan on current expenses, but invests in real estate. Real estate is still an asset. As a rule, in the long run, real estate prices rise plus or minus the rate of inflation. At the same time, owning an apartment also generates rental income. And if you live in it yourself, this income is expressed in savings in rental costs.

It turns out, mortgage credit is usually taken not to spend it, but vice versa - for the purpose of accumulation. In addition, this is the type of loan that is given at the lowest rate, especially if there are any preferential mortgage programs.

In Russia, the mortgage loan format itself is one of the most profitable in the world.

You can fix the loan rate for 30 years in advance, and then act according to circumstances. If the interest rate in the economy goes up sharply, and this often happens in Russia, then you can put the “extra” money instead of early repayment of the mortgage on bank deposit with a yield higher than the lending rate. If the interest rate drops suddenly, you can always refinance your mortgage at the lower current rate.

Another thing is that many psychologically do not tolerate the debt that hangs over them very well, and strive to get rid of it as soon as possible. But in general, a long-term feasible mortgage at a not very high rate is a normal tool that financially literate people can use.

4. Can you really get rich with cryptocurrency?

Cryptocurrency has firmly entered popular culture over the past 7 years. In a very simplified way, it can be considered a decentralized database that allows people who do not know each other conduct financial transactions between themselves directly, without the involvement of any traditional intermediaries such as banks.

As the global financial system develops, its transparency is increasing all the time. Banks are beginning to check any transfers with prejudice, and also require their customers to regularly prove the "purity" of their money. Not everyone likes it, because the criteria for such checks are not always adequate. Crypto just allows you to solve this problem: since banks are not involved in crypto transfers, then you don’t need to ask their opinion.

The disadvantage of cryptocurrency is that no one really knows how much this or that coin should actually cost.

Therefore, the value of coins can easily fluctuate by tens of percent per day, depending on demand, supply and the mood of the masses.

Although for some this is not a minus, but just a plus: there are many people who at one time got rich on the jumps of cryptocurrency rates. Most often, we are talking about those who were lucky many years ago to invest in crypto for nothing and not sell it until it grew hundreds of times. The second option is those who participated in the construction of financial pyramids during the boom of ICO (initial coin issuance) in 2017: in fact, they collected millions of dollars from people for empty fantasies without any obligation to return.

But believing that cryptocurrency will help you get rich easily now is more of a self-deception. And if someone is actively trying to sell you the idea of ​​such an easy income, then this is already a banal scam for money.

Of course, the rate of cryptocurrency may rise in the future. I believe that on the horizon of the next 3-5 years, basic coins like bitcoin or ether may well increase in price by a couple of times. But the repetition of historical records, when the price of bitcoin could easily increase 100 times in a few years, is no longer possible.

It's one thing when a coin with a starting capitalization of $1 billion increases 100 times. And it’s quite another when the market capitalization of bitcoin is already at the level of about 0.5 trillion dollars. - from such a base it would hardly be reasonable to expect a repetition of growth by another hundred times on the foreseeable horizon.

5. What is a digital ruble and should it be used?

In 2023, the Central Bank of the Russian Federation launched a pilot project to test digital ruble - an electronic currency that Russians will soon be able to use. This is another form of money in Russia along with cash and non-cash money.

In my opinion, the digital ruble is such a strange chimera, an attempt to glue the idea of ​​​​cryptocurrency with state control. If the main advantage of cryptocurrency is that its database does not depend on banks and governments, then the digital ruble is the same electronic database, but under the full control of the Bank of Russia. In fact, the Central Bank will be able to see in real time who paid whom and for what. If desired, the Central Bank can directly block any payments or electronic wallets, as well as embed special smart contracts in them so that your digital rubles you could spend not on anything, but only on what seems worthy of the acquisition goal in terms of states.

Ordinary non-cash rubles walk around bank accounts, and the Central Bank, in order to obtain information about the financial transactions of a particular person, must make a request to banks and receive information from them.

With digital rubles, these unnecessary actions can be avoided - the entire database for such rubles will be under the direct control of the Bank of Russia.

As advantages, the Central Bank is now promoting the idea of ​​free transfers of digital rubles between the wallets of individuals, as well as a fee reduced compared to bank cards for acquiring — this will make the sale of goods and services for digital rubles more profitable for business.

But, in my opinion, for most people, these advantages do not look very stimulating. Therefore, it seems to me that sooner or later the government will start more actively pushing people to switch to the digital ruble, especially in public sector.

6. What to invest in so that they bring a good income and do not depreciate?

Usually, when asking this question, many people want to know where to invest for a year in order to get a high return, but at the same time they are guaranteed not to lose money. Unfortunately, there are no miracles in finance: for a short period of time, a bank deposit is usually a suitable instrument, the rate of return on which is often not very high. Stocks, real estate and other assets with higher expected returns are already long-term investments worth thinking about if you are ready to consider an investment horizon of five years.

But if you already have a financial airbag, and on top of it a solid capital has been accumulated, which you are ready to invest, then it makes sense to think about long-term investments. For such investments, what matters in the first place is not the nominal return, but the real one - minus inflation. And if you choose investment options through this prism, then assets that seem reliable to many turn out to be not so safe.

For example, beloved by many gold peaked in 1980, and then began to fall and, adjusted for dollar inflation, has not recovered from the drawdown until now, more than 40 years later. The situation is similar with ultra-reliable US bonds: taking into account the surge in inflation in the 1940s, they sagged by 60% or more, and it took them as much as 50 years to fully recover!

In general, there are practically no assets in the modern world that by themselves would guarantee not only the preservation of capital, but also its growth faster than the rate of inflation.

All a reasonable investor can do is to make diversified portfolio from stocks and bonds (some people also tend to add some precious metals to it). History shows that such an allocation of assets allows, on average, to obtain the most adequate ratio of profitability and risk over the long term.

You need to understand that with such a portfolio in each particular year you are unlikely to be the most profitable investor, because in some years one or another type of assets breaks ahead in terms of profitability. But, on the other hand, you definitely won’t become the most unsuccessful investor either - and on long horizons this is important.

7. Can you save for your retirement?

Many dream of saving for retirement. In the abstract, this is, of course, quite possible. To achieve this goal, those who save a significant part of their income and invest this money in something that brings high returns in the long term will be able to achieve this goal. To do this, it is good to have the ability to control your expenses: the next increase in wages should not be directed entirely to increase the level of consumption, but to a large extent be spent on savings and investments.

But in practice, this is true primarily for those whose incomes are much higher than the average.

The vast majority of Russians live paycheck to paycheck - in this case, it is important first accumulate at least a financial cushion. But even this simpler task turns out to be unbearable for many.

The second nuance is that long-term savings make sense in countries where the economy and financial system are stable. In Russia every 10–20 years quite significant financial upheavals occur, which often lead to the loss or depreciation of the savings of the broad masses of the people. With this in mind, many adhere to the philosophy “I’d rather spend today than save for a beautiful tomorrow.” Personally, this approach is not very close to me, but where its roots grow, I perfectly understand.

In general, here, unfortunately, there can be no simple and working tips for everyone at once.

8. What to do if the money is barely enough until the next paycheck?

There is no magic recipe here. In this situation, you need to try to save at least a little every month, using the most basic tools like a deposit in a reliable bank. At the same time, it is too early to think about all sorts of shares and other securities.

Of course, it is much easier for people with an impressive income to save - for them it means sacrificing, for example, some optional entertainment. And for people with low income to save money is often to deny yourself some vital things. The sad paradox here is that it is precisely such people who, first of all, need a financial cushion: after all, if their small income suddenly disappears, then the question of survival will arise.

Even a small financial pillow will allow you to exhale a little and stop worrying about whether there will be money to buy food next week.

And then you should think about investing more in its development. After all, the surest way to financial security is to improve your skills and find a better job.

Therefore, people who do not have enough income should not think about choosing the most wonderful high-yield ways to invest something somewhere and get rich, but about how to start earning more. You may have to change jobs, move, or even change your specialty.

9. How does inflation work? Why not just print more money?

Inflation is an increase in the general average level of prices for goods and services. At the same time, some goods may noticeably rise in price, others may become cheaper, and still others may not change in price at all.

Oddly enough, the “let's just print more money and give it to the people” approach is used by different countries from time to time, and often it even works quite well. For example, in 2020, the covid pandemic hit around the world and entire industries came to a standstill—many people expected this to have a devastating impact on the economy. But in the US, they simply printed a huge amount of money and poured it into the economy - so a disastrous recession was avoided, a big drawdown did not happen.

But there is a downside: if the Central Bank prints a lot of money and distributes it to the population, then people begin to actively spend it. The effective demand of the population is increasing, and because of this, prices also begin to go up - since producers cannot immediately satisfy the increased demand. So saving the economy from the pandemic with the help of an injection of money eventually had a delayed effect: in 2022, inflation in the United States was very close to 10%, which is rather atypical for developed countries. Now it is declining, but still remains above the historical average.

In general, economists believe that it is not worth completely eradicating inflation.

Its optimal level for stimulating the development of the economy is approximately 2-3% per annum. But more importantly, the inflation rate should be stable, and not fluctuate sharply up and down: consumers and businesses should have a reasonable opportunity to build plans for the future.

10. What is the gold and foreign exchange reserve of the state tied to? Can it end?

Gold and foreign exchange reserves are the same financial safety cushion, but already at the level of the whole state. In those periods when things are going well, a lot of taxes are collected, and the budget has more revenues than expenditures, the states accumulate additional funds in a kind of egg-box. It is needed so that later, in difficult years, these funds can be obtained and used for our needs.

And just like ordinary people, the state has a question: where to store these funds so that they are not lost and depreciated? And they don't have much of a choice.

Most often, states keep their reserves either in gold or in foreign currency. But this does not mean that there are cash dollars somewhere in the safes.

This means that countries invest in the public debt of another country - that is, they buy its securities. For example, state bonds The US is now bringing in a good income at a level above 5% per annum - this is more profitable than just holding the currency without profitability.

Governments typically spread their reserves across different currencies, depending on which countries they trust more and which currency they are most likely to need more. We said that the dollar is now the main currency of world trade and capital investment, so many countries allocate a significant part of their reserves to it. Next comes the euro.

The sanctions situation has now become an important factor for the formation of state gold and foreign exchange reserves. If a country chooses which country's currency is the most reliable way to invest its money, then the risk of mutual sanctions will act as a deterrent.