What matters is not how many dollars you have in your bank account, but what products and services can be purchased with them.
In an article in Prensa.com, Joey Levy discusses the illusion of security of fixed term savings, citing an $10,000 investment giving 6% from 2002 to the present. In current terms, the money will have grown by 80% to $17,908, but in terms of purchasing power, it may have incurred a loss.
"10 years ago on the international market oil traded at $32 per barrel, a pound of sugar at $5.86 and a bushel of corn at $243. This means that in 2002, with $10,000 you could buy 313 barrels of oil, 1,706 pounds of sugar and 41 bushels of corn.
Today, however, with $17,908 you can only buy 205 barrels of oil, 816 pounds of sugar and 23 bushels of corn", which translates into a loss of 34% on oil, 52% compared to sugar and 43% in relation to corn.
While the Federal Reserve of the United States continues inflating, with no real backing, its currency, dollars invested in fixed term deposits will continue to lose value.
In order to maintain purchasing power, Levy recommends diversifying into other currencies and investments that can benefit from the devaluation of the dollar, such as metals and "real" assets such as productive land and natural resources.
On average financial institutions pay fees of 6.6% per annum for deposits in colones in the national financial system.
Although in the financial system, cooperatives offer better returns for deposits than banks, overall rates of these instruments have shown a downward trend in recent years, going from in some cases, as cited by the economist Rudolf Lucke on Nacion.com, "... a rate of up to 15% to current rates of around 6%."
From May 2013 to May 2014 the balance of deposits in dollars increased by 15%.
Up to May this year the balance of current accounts in dollars totaled $3.107 billion and in savings accounts $1.673 billion, 15% and 10% more than in May 2013, respectively. Moreover, certificates of fixed term deposits in foreign currency placed with financial institutions, cooperatives and the Central Government in May 2014 show an increase of 80% compared to the same month last year, according to a central bank report.
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