YEREVAN, November 1. /ARKA/. The World Savings Day has initially been designed to attract attention of people all over the world to the importance of depositing savings in banks.

October 31, regardless of on which day of week it comes, has been declared the day when all savings banks must be open.

The aim of this day’s various events is to inform population about the importance and advantages of keeping savings in financial establishments for stable development of the society.

Various events are held also in Armenia, and not only by the central bank and commercial banks, but also by the financial community, as a whole.

In this connection, ARKA News Agency asked Konstantin Saroyan, chief executive officer of NASDAQ OMX Armenia stock exchange, to advise Armenia’s population how to keep savings.

First of all, Saroyan recommended people not to limit themselves to deposits and to invest their money also into other instruments.

“There are certain standards and rules for keeping savings, but I will present my rules,” he said.

He pointed out two ways for managing savings.

One of them is to deal with an experienced and respected company – a bank, an investment company or another financial establishment.

“This is a direct and simple path,” Saroyan said. “In this case, the governor of this establishment is responsible for decisions – where and how to invest. The investor here saves not only own financial means, but also time. This way of saving is reasonable in the event of large amounts, for example, more than 100,000.”

If one doesn’t trust companies and has sufficient time and the savings are not so large, he/she can manage the money independently, but only after analyzing the whole market and choosing investment instruments – debt or fixed income instruments. There are also instruments, which can have their cost changed from time to time (stocks).

If investors choose fixed income instruments, such as bonds and deposits, they should take into account risks and profitability.

“I recommend everybody not to put all savings in one basket – diversification is needed,” Saroyan said. “I mean issuers in case of investment in bonds, banks in the event of deposits and also currencies.”

The head of the stock exchange recommend people to keep their savings in different currencies, for example, in drams and in dollars.

He advised them to keep the bulk of their savings in drams and the remaining amount in foreign currencies, for example as 60/40 ratio.

“Experience shows that dram savings are very effective,” he said. “Over the last decade, government bonds have proved to be profitable. In this connection, the yield of dram government bonds has completely neutralized fluctuations in foreign exchange rates.”

Saroyan also advised Armenian citizens to invest money in foreign securities through banks for diversifying country risks.

He recommended them to take a closer look at government bonds and corporate securities, for example commercial banks’ securities.

“This is a fast-developing area, and there is a wide choice of instruments,” he said.

The Central Bank of Armenia says residents’ deposits in Armenia’s commercial banks have grown 7.8 times over the last decade reaching AMD 1 636.3 billion or $3.4 billion by late September, of which 61.7% were kept in foreign currencies, mainly in US dollars.

Interest rates deposits in drams ranged from 11 to 13% and on dollar deposits from 5 to 7%.
(In September 2016, compared with September 2015, 1.9% deflation was recorded).

According to NASDAQ OMX Armenia, transactions with government bonds amounted to AMD 22.3 billion in Jan-Sept 2016 against AMD 7.4 billion in the same period a year before.

The yield of up-to-one-year short-term government bonds fluctuates between 7% and 11%, that of mid-term bonds between 11 and 14% and long-term bonds between 14 and 16%.

Transactions on corporate bonds amounted to AMD 973.8 million in late September against AMD 415 million one year earlier.

The yield of corporate bonds fluctuates between 8 and 12 percent. ($1 – AMD 475.34). --0---