Source: the cities
Writer: Azza Hajj Hassan
In light of the deteriorating situation of the banking sector in Lebanon, if not its collapse, and the deterioration of the real estate sector, the savings options for the Lebanese have become very narrow. Saving here is not limited to the financiers or the affluent who often tend to invest and not save, but rather includes everyone who managed to save a small amount of his weekly or monthly income. How is it appropriate for a person to save an amount of money outside the doors of banks?
The issue of saving an amount of money is no longer an easy matter in Lebanon, as people’s trust in banks has become almost non-existent, and the “cash” economy has begun to expand more and more, and accordingly, the majority of families in Lebanon keep whatever money they have in cash at home, and that money is estimated at billions.
On the other hand, the process of saving cash in homes does not escape risks, in light of the high level of crimes of theft, kidnapping and financial extortion. From here, a question must be asked about what are the available options for saving some money with the lowest level of risk?
There is no field of investment completely free of risks, but the risks vary from one field to another. As well as investment, saving is not without risk, although some believe that “cash” savings, especially in US dollars, may escape risks, but in fact, all aspects of saving are also not without risks, albeit in a varying and sometimes slight way.
Between saving dollars in cash, buying real estate in Lebanon, or acquiring ounces of gold, economist Patrick Mardini believes that local savers do not have many options, so escaping towards cash remains the best, especially since all indicators in Lebanon are currently deteriorating. In his interview with Al-Modon, he stresses that saving in dollars in cash is currently the least risky option compared to other assets, despite global inflation and the depreciation of the currency.
As for the stock exchange expert, Jihad Al-Hakim, he does not support the issue of saving in cash only, but advises diversifying savings, not only in Lebanon, but outside Lebanon, and in various assets and sectors. And recalling that there are high returns of about 6 percent on debt bonds belonging to international banks and companies rated AAA, he points out in his interview with Al-Modon that the cash economy is synonymous with poverty, and the Lebanese must find other means to get away from it.
The money accumulated in homes has decreased its value significantly due to the high rates of inflation around the world. From here, Al-Hakim believes that the diversification of the savings basket remains safer and less dangerous than any saving, especially the saving of cash.
Mardini points out that the search for a safe savings option is not easy, as in the past the first resort was banks, and this option is no longer available today. On the other hand, the real estate sector has established some stability, but if the national currency continues to collapse and people are reluctant to buy real estate, the sector’s collapse may continue. Especially since the strong demand for real estate at the beginning of the crisis was not matched by supply, and therefore the real estate is not expected to rise in the near future, according to Mardini.
Since the beginning of the financial and economic crisis in Lebanon in 2019, the process of buying real estate and ounces of gold has been very active in Lebanon, according to bank checks, and it was clear at that time that depositors tended to release their deposits from banks with the least possible damage. As for today, things are different in light of the decline in the check market to the minimum limits, and the search for a safe haven to save has become a major concern of the Lebanese.
All areas of savings carry a certain percentage of risks, whether in the short, medium or long term, especially in Lebanon, but if we want to distribute risks and reduce their size, it is necessary to save through real estate, whose prices have fallen a lot compared to before the crisis, and gold, which is considered A safe haven throughout history, of course, while keeping cash savings in a foreign currency. In this case, the saver may avoid some of the losses that are likely to be incurred in the event of a deterioration in the price of any of the assets that he resorted to.
Taking into account two things, the first is that saving in gold varies according to the type of holdings. The safest saving among the types of gold remains in Lebanese gold pounds, as the loss if it occurs when selling it may not exceed 10 dollars, while the loss in Swiss pounds reaches 40 dollars. The second matter is related to the real estate, as the investable real estate remains one of the best assets compared to the non-investable real estate.