A time ago, in September 2014, I started to save some money, I was so eager to save money, that I even started a new category on my blog - 'Savings Reports'.
4 months from my first, and yet latest, Savings report have passed, back then in September I deposited a small amount of sum of 300 GEL, which back then equaled to $169.68 or EUR 131.81.
By today's exchange rates 300 GEL would equal to $145.27 or EUR 128.75, which basically means following, since the end of September Georgian national currency Lari (GEL) has lost it's value to USD for -14.38%, and - 2.32% to Euro.
Investors don't like to lose money, right?
I didn't paid much attention to Lari fluctuations until now, when I found that I have lost around 14% of my money if exchanged to USD.
Unfortunately I'm not wise enough (just a regular dude) to tell you what happened to Lari exactly and why it's loosing it's value both to USD and EUR, probably you have heard that USD is getting stronger to almost every other currency. Wise economist call it a - dollar was not assessed, and now it's being assessed (probably they use some other term for that).
Well it could be one of the reasons, I agree.
Second reason might be related to Rubles crisis in Russia, again, probably you already have heard that Russian ruble has lost it's value to dollar for about 40% already. I will re-publish some quotes from article Money Troubles: Russia's Weak Ruble Pulls Down Neighbors' Currencies from RFE/RL
As the value of Russia's ruble tumbles amid low oil global prices and Western sanctions, it is taking the currencies of many former Soviet republics down with it.
...
The same thing is happening next door in Georgia. Moscow may not be Tbilisi's major trading partner, as it is Yerevan's, but Russia is the single biggest source of remittances from Georgians working abroad. Now, however, the rubles they send home inject far less money into the economy than before.
...
The drop in the Armenian and Georgian currencies create an array of problems for both countries. It means each has to pay more for badly needed imports from the West and pay more to service their foreign debt. At the same time, they must spend some of their scarce foreign currency reserves to slow the rate at which their currencies lose value if the public is to maintain faith in the nation's money.
I believe the truth is somewhere in between.
Anyway back to my savings report - during those few last month I have accumulated more than just 300 GEL, I have deposited in average 300 GEL each month (in November I deposited 350 GEL) in ProCredit's bank savings plan, which offered 6% annual interest rate until December 2014, and decreased it's annual rate to 5% starting January 2015.
Speaking of decrease of interest rate to 5% - I was quite naive and believed that it's a good sign, and banks are looking to stabilize Lari (which I believe they are doing), but if comparing GEL/USD exchange rates in December 2014 and January 2015 it doesn't look so.
| Date | Deposited GEL | Interest GEL | Monthly rate % | USD Buy | USD SELL | EUR Buy | EUR SELL |
| 29.09.2014 | 300 | 0.50% | 1.738 | 1.768 | 2.215 | 2.276 | |
| 31.10.2014 | 300 | 1.58 | 0.50% | 1.739 | 1.769 | 2.167 | 2.28 |
| 28.11.2014 | 300 | 3.07 | 0.50% | 1.817 | 1.857 | 2.264 | 2.325 |
| 29.12.2014 | 350 | 4.73 | 0.50% | 1.84 | 1.89 | 2.23 | 2.31 |
| 30.01.2014 | 300 | 5.39 | 0.42% | 1.965 | 2.065 | 2.232 | 2.33 |
| Total GEL | 1550 | 14.77 | |||||
| Total Savings GEL | 1564.77 |
Since the end of September I have saved 1550 GEL and got 14.47 Lari in interest.
Though taking into account that eventually I have lost 14% if converted to USD I made spontaneous and probably irrational decision to split my savings into 3 currencies.
I exchanged my money to USD and EUR and again deposited them into 3 savings plans, with following interest rates (annual) - GEL 5%, USD 2.5%, EUR 2%
| Currency | Deposited | Annual % | Monthly % | Interest | |
| GEL | 685.17 | 5 | 0.42 | 2.87 GEL | |
| USD | 200 | 2.5 | 0.208 | 0.416 USD | |
| EUR | 200 | 2 | 0.166 | 0.332 EUR | |
| Total Value GEL | 1524.57 | ||||
| Total Value USD | 753.8 | ||||
| Total Value EUR | 667.22 |
As you can see - my spontaneous decision cost me 40.27 Lari if I would convert my money back to Lari. What I'm not doing any time soon.
I made this decision just to make more confidence that I will at be least somehow covered if in one day I will find that my savings has lost around 50% of it's value, and bread in the market cost 3 times more. In case of that I needed to do this currency exchange. Just for my confidence.
In conclusion
Though having interest rates applied to your money is fun and probably a cool way to increase your money, I personally don't think so (well I find it cool, to see increase in savings each month). I prefer to deposit some larger amount of money each month in order to save for the rainy day, and having a small interest applied to it is just a small bonus. I believe that for investments to have a money in you bank account is the same as to have your money under your pillow - money should be invested somewhere in order to earn, there are plenty of investment opportunities, starting stocks, bonds, mutual funds and other.
Since the amount I have saved in last couple of months are rather modest - I'm not looking to invest it right now in some stocks or bonds - I'm looking to increase my savings amount to more decent sum before investing it somewhere else. Still, I'm looking for ways not to loose my money.
I will keep you updated how I'm performing in upcoming Savings Report series.
P.S. This is not first time I'm covering Lari troubles against dollar, here are some other articles: