Toni Milun: Citizens have more opportunities for saving and investing than ever before

Saving is one of the most important financial habits a person can develop, as it provides security and stability in everyday life and enables the achievement of long-term goals. Various methods of saving and investing, from traditional savings accounts in banks, real estate investments, to modern options such as investment funds, cryptocurrencies, and digital investment platforms, offer everyone the opportunity to tailor their investments to their needs and capabilities. According to HGK’s calculations, the average savings per capita in Croatia is 9600 euros, and citizens save an average of 77 euros per month.

In any case, there is plenty of room for improvement regarding financial literacy. Toni Milun, a mathematics professor and financial vlogger, who invests his time in financial education for citizens, commented on the state of savings and investments for Lider.

– The average savings in Croatia is significant, but a small portion of citizens has huge savings of several hundred thousand euros or more, while a large part of citizens has very little, so the average comes out quite large – said Milun.

Most Croats, 65 percent, save to have money for emergencies, followed by those who save to create a financial cushion for themselves and their families, 45 percent, and 21 percent of citizens save for retirement. Only seven percent of citizens save for education, while 28 percent save for the purchase of a house, apartment, or car, and 17 percent of citizens save money for vacations, according to a survey by the IMAS agency from last year.

– I would like all citizens to have savings for emergencies and to start investing for retirement as soon as their income allows. Emergencies happen to all of us sometimes, car breakdowns or more unfortunate cases, so it would be good to have savings so we don’t have to take very expensive non-purpose loans. Regarding retirement savings, it is extremely necessary because pensions are low. With new legal changes, obtaining a housing loan will become a bit more difficult, and we will need to have certain savings, like in some more developed countries such as Norway and Ireland. There, it has long been quite common to already have 15 percent of the money for an apartment when taking out a housing loan. This is now coming to us, so the purchase of an apartment will be quite difficult for some citizens – said Milun.

Croatia is still not financially literate enough

Milun lists the tools for saving and investing that our citizens most often use and emphasizes that they are still not financially literate enough.

– In Croatia, many people still keep term deposits in banks, which is not very profitable today. Two years ago, government bonds and treasury bills started, so people could get a bit more for their money, and almost half a million people in Croatia pay for voluntary pension savings, which is a positive trend. We are not very financially literate, although we have made progress in a large study from 2023 compared to 2019 – he said.

Although, as he says, he is not a financial advisor, he emphasizes that there are tools for saving and investing that he recommends to citizens to achieve the maximum value of their money.

– Voluntary pension savings or European pensions are a good form of retirement savings, and recently we have three robo-advisors, Finax, InterCapital’s Genius, and Revolut. These are applications that ask you certain questions like: what do you want to save for, what are your income levels, what would you do if the value of your invested money fell by 20 percent, etc. Based on your answers and your risk preference, they recommend the optimal combination of equity and bond funds for you – said Milun.

Americans are increasingly abandoning traditional savings plans and embracing bitcoin as a means of saving. Despite the risks and volatility, some families invest in cryptocurrencies to build wealth for their children, Bloomberg reports. In Croatia, there is also an increasing investment in cryptocurrencies, although not as extremely.

– Many in Croatia invest exclusively in cryptocurrencies, especially young people, but it is important to emphasize that investing in cryptocurrencies is still considered speculative investment. I also invest in cryptocurrencies, but only that part of the money that I am completely ready to lose – says Milun.

He emphasizes that the cryptocurrency market is extremely volatile, meaning that prices go up and down very quickly, much more than the stock market, and especially compared to the bond market, and warns that the cryptocurrency market is full of frauds.

– All in all, I can say that I am glad that people have finally moved away from exclusively term deposits, that they have turned to government bonds and treasury bills, bond and equity ETFs that have moderate risk but also higher average returns than bonds. Cryptocurrencies are still quite unregulated, and the aforementioned ETFs have emerged that are safer for investment. Citizens today have a much greater choice for saving and investing than 10 or 15 years ago, and I am glad that this is being used more and more – concludes Milun.