Investment Options For A 10,000 RON Capital

Continuously declining interest rates offered on bank deposits and the high volatility of the capital market are making it increasingly difficult to decide on a safe way to invest personal savings and, of course, secure the highest profit in the shortest time starting from a relatively affordable amount of capital.

Additionally, political instability is aggravating the depreciation of the RON, which, combined with the inflation rate, is inconspicuously grinding the purchasing power of the money in the pocket.

Investment funds have turned out to be the healthiest investment options at times of crisis, as their assets have gained a hefty 166 per cent this year to over 2.5 billion RON. Moreover, the general performance of the investment funds has well exceeded that of the capital market.

While presenting notably higher risks, several stocks available on the Bucharest Stock Exchange - including financial, banking and pharmaceutical stocks - have achieved important growth this year, as high as 200 per cent or more in some cases.

At the moment, 10,000 RON is enough to go to the Bucharest Stock Exchange and buy 0.001 per cent in SIF5 Oltenia (the "richest" of the five financial investment firms - SIFs), or 0.054 per cent in Farmaceutica Remedia - Deva (RASDAQ:RMAH, which has achieved considerable growth this year) or 0.1 per cent in Armatura - Cluj Napoca (BSE:ARM).

The same amount is sufficient to buy 0.01 per cent in Broker - Cluj Napoca (BSE:BRK), the only brokerage firm listed on the Bucharest Stock Exchange. Alternatively, the budget is enough to buy 0.09 per cent in the brewery Bermas - Suceava (BSE:BRM), or 0.04 per cent in chemical fertilizers producer Amonil - Slobozia (BSE:AMO), each of them having reported good performance this year.

Gold is a noteworthy alternative to a stock portfolio, as the precious metal has been in high demand lately, rising above important limits and currently heading for the 1,100 USD/ounce milestone. The beginning of the crisis and the related decline of the capital market have pushed the price of gold up by more than 65 per cent from the beginning of 2007, whereas the NYSE Dow Jones lost 20 per cent. Gold is currently worth some 100 RON/gram in Romania, but analysts are confident that it may reach up to 100 USD/gram.

Bank deposits are safer, but not so profitable investment options. The monthly interest rate currently available for foreign exchange deposits is roughly 0.3 per cent.

Nevertheless, studies on saving behaviours in Romania indicate that most individuals are rather inclined towards riskier and more profitable investments, whereas more conservative investment options attract much fewer customers. In turn, commercial banks insist that interest rates offered on fixed-term deposits will be correlated to the key rate of the National Bank of Romania, which currently stands at 8 per cent.