Why Is the Dollar Not a Sensible Investment Instrument?

It is not easy to save in Turkey, we generally live with debt management and gift economy. This is the part I call debt management, by juggling credit cards, withdrawing from one and depositing from another. manage the situation.

The gift economy is generally “You do my job, I’ll do yours” logic, because it is not always possible to find the financial means to solve something. Those who can put aside a little money immediately ask this question: “What about the dollar?”

Yes, TL has historically been against the dollar constantly losing value Buying dollars is one of the easiest ways to protect against inflation or depreciation in a currency and TL. So, is it really the most logical investment tool? Is it even an investment tool?

First of all, what is an “investment instrument” and what is not?

The logic of the investment instrument is that the asset you acquire is for you. must make money. This could be a bond, a deposit account, real estate, there are various alternatives.

Here, it is both right and wrong to consider foreign currency as an investment tool. The wrong situation is this: I converted my money into foreign currency, now it will appreciate. Yes, it is valued according to TL, but there is such a thing as dollar inflation. 10 years ago To reach the purchasing power of $100 today, you need to buy $133. there is need.

Yes, if you say “I make arbitrage transactions, I can earn income from my foreign currency beyond the exchange rate change..”, then you can accept it as an investment tool. Otherwise foreign currency and of course dollar It is also a means of payment. Somewhere in the world, someone pays dollars and buys wafers etc., it has no different use than TL. Understanding this will benefit us.

Let’s now look at the inflation of the dollar with the means at hand:

First, one of the oldest methods underlater to the stock marketand after that to real estate We will look and compare their performance against the dollar. If you want to decide for yourself, you can compare the dollar with almost anything you want and whose price change chart you can find.

First, let’s look at the bottom:

At this point, our job is very easy because XAU/USD We have a parity that shows how many dollars we buy the same amount of gold in different periods. Gold has fallen against the dollar in the past year 8.73% has gained value.

As we expand the time period in the table, the difference becomes more dramatic. Parity emerged Gold since 1833has gained 9730.2% value against the dollar.

Let’s come to Borsa Istanbul…

Dollar will rise completely against TL in the 5-year period. by 482.10% gained value. So, if you went and bought a dollar with 10 thousand liras that day, you would have 48,200 TL today. Think it’s a good profit? Minimum wage in the same period 8.4 times It increased. BIST100If you divided this money equally and invested it in companies in , your money would be 96.300 TL It would pass.

So what is the situation in housing?

Of course, there is a lot of variability in the housing market from location to location and building to building, but Central Bank of Türkiye Republic The House Price Index report announced by us comes to our aid at this point.

Since the comparisons between 2017 and 2023 are the last comparisons we have, we will look at that index change. In this case, in Turkey In the period 2017-2023 residences are, on average, fully 11.5 times is valued. So, if you sold a house in 2017, invested the money in dollars, and tried to buy the same house again, at best (When you buy dollars at the cheapest and change them at the top) your money would gain 8.3 times the value. the price of the house For 28% You had to find money.

Bonus: Tea brand

To drink tea before the pandemic, shop at the shopkeeper’s teahouse Tea brands that were bought for 1 lira each are now priced at 10 lira. is given. We call it cheap when you drink oralet for 10 liras.

As a result, although buying dollars partially protects us against inflation in TL, it does not protect us from dollar inflation. For investment to be truly meaningful, it must enable us to generate profits despite inflation.

Our other content for those interested in the subject: