Yes in CDT, FIC, local products.
No credit cards or keep cash under the mattress.
2023 began to roll while people on the street find the same dilemma on the table: they don’t know whether to put the talk ‘under the mattress’ or put it to generate wealth. Here we give you recommendations on what to do in times of dollar fluctuations and inflation.
When we want to make a decision that affects our pocket in any way, positive or negative, we usually ask an expert, basically, because we trust their judgment.
Well, at CENTRÓPOLIS we decided to do it. We consulted with Edwin Torres Gómez, professor and researcher at the Department of Economics at the University of Antioquia, about what is the best decision when moving our money.
2023 represents a great challenge in economic matters for everyone in the country, the increase in the cost of the products of the family basket has made us rethink each expense, for Professor Torres the recommendations for households are summarized in basic decisions: “do not buy unnecessary and do not saving money” are the key to surviving inflation.
EHere are the five recommendations for homes:
1. Avoid consumption of unnecessary goods, those that have no future utility or depreciate in the short term.
2. Keep up with debts and avoid acquiring new ones. Spending for the sake of spending is not recommended, much less the use of Credit cards at long terms, it is better to keep them on the nightstand as interest rates may continue to rise. Currently, the usury rate stands at 45.27%, which means that school supplies purchased today are 25% more expensive than the previous year.
There are mistakes that should not be made again, in 2022 for example; There were families that in the days without VAT, bought with credit cards to have a reduction of 19% in VAT, but they were indebted by 22% with credit, strategies that do not compensate.
3. Look for substitute goods (hopefully of national origin) to replace those products that show more significant price increases. That is, buy products or services that have very similar functions such as: Android for iPhone, brand and white label products; among others.
4. Avoid keeping money stored in cash for long periods. Having money under the mattress with inflation like the current one is risking rapidly losing purchasing power.
¿Y yes i have savings?
For those who have the option of saving, who are really few, that is, the 8.8% of Colombians who, according to the 2022 Dane Social Pulse survey, have the possibility of saving some part of their income, the recommendations are different.
Professor Torres Gómez recommends getting very good advice before making any decision, evaluating the risk and betting on the most conscious – prudent option; what happened in 2022 will not necessarily be repeated in 2023. Having extra money and being able to invest is a great advantage in a country where the poverty rate is high.
And what for some may play against, for others who have savings it may be a game won, if for example it is invested in instruments such as CDTs, (Term Certificates of Deposit) which in 2023 are paying the highest returns of the last years, 15 percent effective per year.
Another option to obtain profitability from savings is in the Collective Investment Funds (FIC), an instrument in which many people deposit their money and the administrators invest in a portfolio of diversified active services, among these are some fiduciaries, Investment Management Companies (SAI) and stockbrokers, these regulated by the Financial Superintendency of Colombia.
What should governments do with high inflation?
Academics are emphatic that the State is essential to avoid misunderstandings with inflation, hence they recommend:
1. Improve information channels to avoid speculation.
2. Maintain a price monitoring system, especially in supply centers.
3. Not intervene in the decisions and positions of the Bank of the Republic to avoid speculation.
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