Slovakia: Financial literacy and inflation risks for savers

Slovaks hold over 49 billion euros in bank accounts, but financial experts warn that inflation is eroding the purchasing power of these savings. With annual inflation at 3.3%, typical interest rates on current accounts remain at zero, and even high-yield term deposits may fail to protect value after taxes.

Financial analyst Marián Búlik from OVB Allfinanz Slovensko advises against keeping all funds in banks for the sake of immediate liquidity. He suggests maintaining only a financial reserve in cash and diversifying the remainder based on time horizons. For example, over 10 years, 30,000 euros in a savings account at 1% interest would reach 33,150 euros, whereas equity ETF funds at 7% could grow to 60,300 euros.

A survey by NMS highlights broader issues with financial literacy in Slovakia. The study found that many citizens struggle to comprehend large numerical values, such as the difference between millions, billions, and trillions. This lack of understanding is particularly relevant in the cryptocurrency market, which is valued in the trillions of dollars, and in navigating English-language financial terminology where the term ‘billion’ refers to a thousand million rather than a trillion.