Since February this year, the portfolio of time deposits in banks has grown by almost 1.5 billion euros, or 40 percent. In June alone, this portfolio increased by 315 million. Lithuanians' love for deposits is significant and despite the bumps along the way, it seems to remain steadfast. There are quite a few reasons for this, one being deposit insurance. All deposits in Lithuania are insured and protected, though "only" up to 100 thousand euros. This means that anything above 100 thousand euros would be lost in unforeseen circumstances. However, it is probably rational to say that most deposits will not reach this amount. This deposit insurance has been in place for a long time, since 1997. Another thing is that deposits are an old and fairly well-understood tool. Although we have had our bumps in these "relationships," one of the more painful and recent can be called the 'Snoras' saga. About 90 percent of all deposited funds were returned under the insurance, but the non-returnable deposits under this insurance amounted to 1.5 billion euros out of a total of 5.6 billion euros. There have been other cases where it was not possible to recover all funds related to deposits, whether it be Ūkio bankas or issues related to deposits in credit unions. However, despite these bumps, deposit insurance attracts many people, but are there bigger problems with holding deposits? There are, so let's talk about that.

Inflation, interest, and deposits

It becomes clear that deposits are a popular tool that Lithuanians use for saving. Deposits can no longer truly be called an investment, although most people are happy that they receive a return – 3.5–4 percent interest – on their money held in banks. However, currently, with inflation significantly reduced compared to last year, reaching 9 percent (in June), your money is not only failing to generate a return, but you are losing about 5 percent of the value of your money. Deposits are not an investment, but if you're losing about 5 percent of all your funds, can this be called a savings tool? Here I'd like to use a couple of quotes, one about deposits as an investment, another as a savings tool. The quotes are from 2021, but I'll explain later why they are even more valid now. "Deposits as an investment tool lost their purpose about 15 years ago. (...) After the last crisis, we entered a low-interest-rate era and currently saving or accumulating in this form is not sensible. Inflation 'eats' people's savings when they are in banks." "But as the Bank of Lithuania's surveys show, people still keep their savings mostly in deposits, and this is not saving." The author of these quotes is Eivilė Čipkutė, President of the Lithuanian Banking Association. These quotes are 2 years old, but let's see what has changed since then. At that time, inflation was about 2 percent and the interest rate for deposits was zero or near zero. So the devaluation of money was about 2 percent. This means that the depreciation is now even greater than at that time. Thus, we can call deposits a tool that partially reduces the devaluation of savings created by inflation, but calling it saving or investing is incorrect.

Other ways to save and invest

Recently, the state offered another tool, as it says to invest – Government savings bonds, which had been abandoned in 2021. This is probably an even safer financial mechanism, its sustainability guaranteed by the state itself, with the only possibility of not recovering the money being a state bankruptcy, which is highly unlikely. The return is close to what banks and credit unions offer for their deposits – 3.7 percent. For those who do not manage larger financial resources, such a financial saving tool in terms of popularity could possibly compete with deposits, but it is certainly no miracle. Both tools are lower risk, but only slightly reduce the impact of inflation, rather than saving. Therefore, it is necessary to talk more about investment education in Lithuania.

Both physical and legal entities have the opportunity to invest in crowdfunding platforms, which, as a possible alternative, were already mentioned in the context of those quotes by the finance ministry and the Bank of Lithuania in 2021. Such investment has its drawbacks, it is not as safe, there is no state insurance that would return the money, but some platforms have their own protective measures, though limited. However, with greater risk, there can be a higher return. Such investment can yield a return of 13–15 percent, which would not only protect the money but also earn on the funds held.

The state often uses a very nice and correct slogan when advertising these bonds, saying that by buying these bonds, you invest in state projects. This is very important and probably pleasant for everyone to contribute to the development of the state. However, by choosing other savings tools than deposits, you can contribute to the success of small and medium-sized businesses, where visiting a cultural object, bakery, or other institution, you know that you are contributing to its success, and together you have managed to find ways to overcome inflation.