Who would’ve thought it would come to pass…

For decades, we have believed that keeping savings in foreign currencies is the safest way to safeguard one’s capital. People who worked hard and saved money in local currency suffered tremendously to such a degree that they were left without any sustenance. This is what brought to life the idea that hard-earned cash is best kept in a foreign currency. In Serbia, that currency was the euro. Savings deposited in the bank earned the deposit owners a small interest – that’s great, and if not deposited in the bank, the euro was believed to be safe and that no loss would be incurred. So we believed.

How did Euro turn out to be the poorest investment of all?

Simply put, it happened because developed economies got caught up in the inflation vortex. With the onset of the pandemic, the governments issued a certain amount of money to secure grants aimed at providing assistance to families and companies to survive past this reproduction cycle. And it proved a success! In the first year of the pandemic (considering the severity of the impact on the reproduction cycle), the drop in GDP was surprisingly small.

However, printing money for an increasing number of needs is an addiction that even the most developed countries are not immune to. Consequently, the dramatic increase in inflation in EUR/USD zone reached an annual rate of 6% to 8%.

Nowadays, if you have 100,000 EUR in savings, three years later its value would drop to approximately 82,000/83,000 EUR. We will not even bother to calculate what it would come down to in ten years.

What are the options in the circumstances of high inflation

It is best to invest in an active business as it would provide you protection against inflation. But, how about people who have their business or a profession and wish to put some money aside, expecting it to be preserved and, hopefully, somewhat increased. The options are the following:

Real estate

The idea that the price of real estate will always be on the rise is not erroneous in itself, but still, it is not what it was once believed. The real estate prices have increased dramatically and there is a possibility that your purchase might be highly priced. If you need real estate for your personal use, you cannot go wrong with the investment. If you purchase 100 m2, even if at a high price, you will still have those 100 m2. It will not shrink down to 80 m2 and the substance of the property will not erode. However, if you expect its value to continue increasing, with a view of reselling for a profit, it may not prove a safe bet at all. There are no assets whose prices have a more regular boost and bust cycle than is the case with real estate.


Slowly but surely, the gold has been losing its ground as the primary hedge against any crisis. For centuries, it was a safe haven for any disaster, but it has failed to prove its merits as a hedge against inflation. People are very proud of and loud about any profit earned from gold, but there are plenty of those who suffered losses. In the past two years, the price of gold was practically stagnant. The Ukrainian crisis proved that gold may provide some protection against the dangers of politics and war but not to the extent it used to. Besides, the gold has always had a fundamental value in use to some degree while it mostly represented a convention arranged between peoples from the vast majority of cultures. Lately, its reputation has been waning. 


Principally, commodities can be a good hedge against inflation. They may be traded just like stocks (through the so-called EFTs). Commodities are not an easy target for trading as they are governed by market supply and demand and political crises as well, which is why their prices are so volatile.

Bitcoin and other cryptocurrencies

After years of discourse, the facts about the story behind bitcoin are finally coming together. Bitcoin is not a currency but a type of speculative asset. It does not have an intrinsic value or any advantage as an advanced means of payment compared to electronic money guaranteed by governments, except for transactions resulting from illegal activities. It is highly prone to theft and no institution will reimburse the owner for the loss. Practically, its only true value comes from the large number of people who believe in it.

It is not a small value and it does not mean it would drop down to zero, but the absence of an intrinsic value makes it unstable as a means of storing earned assets. We advise our clients to join in if they don’t want to “miss the party”, as there are plenty of others already participating, but they should keep such investments at a level where any losses, should they occur, would not cripple their finances. 


The government bond market is huge but interest rates are highly negative. U.S. ten-year treasury bonds have interest rates lower than 2%, while interest rates on European bonds are barely above zero. Therefore, you will not lose 7% a year, but only 5%.


Large economies, primarily the United States, recklessly printed huge amounts of money and practically spiked inflation whose victims are hardworking people who earn salaries and slowly build their savings. However, these economies are fundamentally healthy.

The USA has an excellent GDP and it will continue in the years to come. GDP relies on healthy companies that are predominantly listed on stock exchanges, whose co-owner can be anyone, including a citizen of Serbia. These companies exhibit incredible vitality in amortising shocks through innovations and “pricing power” i.e. capacity to adjust their selling prices to protect themselves from inflation, and their profit will continue to rise. Its rise will be faster than the currency is devalued.

Having in mind the risks, the knowledge required to invest, and how easy it is to invest, there is no better place to hide from impairment of assets than the investment in stocks of good companies operating in leading global economies.

Nebojša Divljan, owner