Money, explained
The same 1,000 lei, three roads: the mattress, the bank, the stock market
Pick a year and a sum. Compare cash kept at home, a hypothetical simulation using the average rate BNR publishes each month for new term deposits, and US shares. See how their buying power changes over time.
Or start where you are:
After inflation: lei with 2007 buying power. Data: INS, BNR, Shiller.
- Mattress391 lei39% of the original buying power · cash kept at home
- BNR simulation956 lei96% of the original buying power · hypothetical index calculated month by month using BNR’s average rate for new household lei term deposits, before tax
- US stocks5,270 lei5.3 times the original buying power · shares in the 500 largest American companies, dividends reinvested, bought in dollars
Sums are in lei with the buying power of the year chosen, up to July 2026. The dotted line is the starting sum: below it, the money buys less than at the start. The BNR line is hypothetical: it applies the monthly average rate for new term deposits before tax; it does not represent a real account. Stocks here means the US market, the only one with complete public records over 150 years, dollar–leu currency risk included.
From January 2007 to July 2026, Romanian prices rose 2.6-fold. Money kept at home lost 61% of its buying power. The hypothetical index, using BNR’s monthly average rates for new household lei term deposits, ended at 956 lei per initial 1,000 lei, in starting buying power, before tax. This is not the return earned by a real deposit renewed each year: the BNR average covers deposits with different maturities, and each deposit’s rate and maturity depend on its contract. US shares multiplied it 5.3-fold, with years in which they fell by a third.
Why are 1,000 lei no longer 1,000 lei?
Money does not stand still, even in a drawer. Prices rise almost every year, so the same banknote buys less and less.
The pace at which prices rise is called inflation. If inflation is 5% in a year, a 100-lei basket of shopping costs 105 lei by the end of it. The sum in your wallet is the same, but it buys less.
From January 2007 to July 2026, Romanian prices rose 2.6-fold in total. A basket that cost 100 lei at the start of 2007 cost 256 lei in July 2026.
The chart shows inflation year by year since 1991. The first years after 1990 were another world: in 1993 prices rose by 256% on average. Anyone with savings in lei in 1990 watched them melt within a few years. Since 2005 inflation has been far lower, but not zero: the yearly average was 5.1%.
Low, predictable inflation is not the enemy. The National Bank of Romania targets 2.5% a year, give or take a percentage point. What matters is whether your money grows faster or slower than prices. The difference is called the real interest rate.
What do deposit rates show?
The chart applies each month’s BNR average rate for new household time deposits in lei to a hypothetical balance. For every initial 1,000 lei, the simulation ended at 956 lei in starting buying power, before tax. This is not the return earned by a real deposit renewed each year: the BNR average covers deposits with different maturities, and each deposit’s rate and maturity depend on its contract.
BNR reports the interest rate as a percentage per year for each month. The simulation converts that month’s average into a monthly compounding factor and compounds it before tax. A real deposit’s rate and maturity depend on its contract; the model does not track a particular account. Tax on interest would reduce the amount left.
How it is measured. INS computes the consumer price index (CPI) from the prices of several hundred goods and services, collected monthly across the country, each weighted by its share of household spending in the household budget survey. The chart shows annual averages: one year's prices against the year before.
Your inflation is not the average. A family spending a lot on food and energy felt more than the 2022 average of 13.8%. One paying a fixed rent felt less.
The real rate is (1 + interest) ÷ (1 + inflation) − 1. A 6% deposit in a year of 8% inflation means a real loss of almost 2%, even though the statement shows a gain.
What matters more: how much you put in, or for how long?
Ana sets aside 500 lei a month from 25 to 35, then stops. Her brother Bogdan starts at 35 and puts the same monthly sum in until 65. He puts in three times as much. Who has more at 65?
The answer depends on a single number: how fast the money grows each year. Drag the slider and watch the winner change.
Ana
10 years × 500 lei = 60,000 lei put in
334,933 lei
Bogdan
30 years × 500 lei = 180,000 lei put in
409,349 lei
Bogdan has more, but he put in three times as much. Each of Ana's lei became 5.6; each of Bogdan's, 2.3.
This story usually circulates with a fixed ending: "Ana wins". That is only true above a return of about 6.3% a year after inflation. Below that, Bogdan's 20 extra years of saving count for more. The right lesson is different: every leu put in early is worth several times one put in late.
The reason is called compound interest: a year's gain stays in the account and earns gains of its own. At 5% a year a sum doubles in about 14 years. The early years have time to double several times; the late ones, not at all.
The same mechanism works against you on debt. A debt growing at 30% a year doubles in about 2.6 years. For consumer loans from Romanian non-bank financial institutions (IFNs) covered by Law 243/2024, the general APR cap is the BNR Lombard rate plus 27 percentage points: 34.50% a year at the 7.50% rate BNR maintained on 8 October 2026. Article 6 sets an exception to the general APR cap: loans of up to 25,000 lei have daily total-credit-cost caps: 1% up to 5,000 lei, 0.8% from 5,001 to 10,000 lei, and 0.6% from 10,001 to 25,000 lei. In each band, the total amount repayable cannot exceed twice the credit amount. Compound interest works for whoever receives the interest.
What the calculation assumes. Contributions go in at the start of each month; the return is constant and real (after inflation); there are no taxes or costs. Real returns are not constant: the same average with good and bad years in a different order can give different final sums to someone saving gradually.
What return is realistic? For comparison: the hypothetical index in the first chart, built month by month from BNR’s average rates on new lei deposits, had an annualized real return of −0.2% before tax over that period. US shares returned a median of 6.8% a year over 30-year periods since 1871. None of these numbers is a promise about the future.
How often has the stock market lost money?
Stocks rise over the long run and fall often in the short run. How long is "long"? Below is every possible period from 1871 to today on the US market, dividends reinvested, after inflation.
Choose how long you would leave the money untouched. Each point on the line is a period starting in a different month. The red zones are the periods at whose end the money bought less than at the start.
Of 1,749 10-year periods, 193 ended with a loss. The worst began in March 1999: −5.9% a year.
Over one year, US stocks lost money after inflation in 30% of periods. Over ten years, in 11%. Over 20 years, in just one period out of 1,629: the one starting in June 1901, at −0.22% a year. Over 30 years, in none.
The falls were real and long. The table shows the largest falls in real terms. Anyone who bought at the 2000 peak waited 153 months to get their starting buying power back.
| Crisis | Real fall | Recovery |
|---|---|---|
| Great Depression, 1929–1932 | −77% | 86 months |
| Oil shock, 1973–1974 | −50% | 144 months |
| Dot-com bust, 2000–2003 | −45% | 153 months |
| Financial crisis, 2007–2009 | −50% | 65 months |
| Pandemic, 2020 | −19% | 7 months |
| Inflation, 2021–2022 | −25% | 28 months |
If you need the money in two years, the stock market is the wrong place for it, however good the average. If you need it in 20, history says something different from fear.
Why America? Because it is the only market with public monthly series, dividends and inflation included, over 150 years: the file kept by Robert Shiller of Yale. But America was the century's most successful large market, which flatters the numbers. The Dimson–Marsh–Staunton yearbook finds that for 1900–2025, equities were the best asset class in all 21 countries with continuous histories. Not all matched America: the developed-markets index, the US included, returned 8.5% a year in nominal dollars, against 9.8% for the US alone.
How it is computed. Prices are monthly averages of daily closes, so falls within a month were deeper than shown here. Dividends are reinvested monthly. Taxes, costs and exchange rates are not included. Last month in the data: September 2026; dividends after June 2026 and the latest US inflation are estimates in Shiller's file.
For someone in Romania, foreign shares carry one more risk: the exchange rate. The leu has weakened against the dollar in some periods and strengthened in others, and that adds to or subtracts from the market's result.
Are ETFs the best investment?
An ETF is a wrapper for an investment. With a single trade you buy a whole basket of shares or bonds. What is in the basket decides the risk. The cost decides how much of the gain stays with you.
An ETF on a world index holds hundreds or thousands of companies from dozens of countries. You cannot lose everything because of one firm. You can lose a lot, for a while, when every market falls at once, as in 2008.
The big difference between funds is the yearly cost. It looks small, but it compounds too, like interest.
Same money, different costs
1,000 lei a month for 30 years, at a hypothetical 5% a year above inflation. The only difference is the fund's yearly cost.
A 1% yearly cost takes 17% of the final sum; a 2% cost, 30%. Nobody knows the future return. You know the cost in advance.
So are ETFs "the best"? There is no best investment for everyone. There are questions that make one suitable for you or not: when you need the money, how much of a fall you can bear to watch, what it costs. ETFs on broad indices answer the last two well: they are diversified and cheap. No product answers the first.
The opposite of an index fund is an actively managed fund, where a manager picks the shares. S&P Dow Jones Indices' SPIVA Europe scorecard, with data to the end of 2025, finds that over ten years 98% of actively managed global-equity funds denominated in euros returned less than the index they are measured against.
What else matters in an ETF: whether it reinvests dividends (accumulating) or pays them out (distributing); where it is domiciled, which changes the tax withheld on foreign dividends; the currency you buy in; how closely it tracks its index (the gap is called tracking difference); and broker fees, which come on top of the fund's cost.
In the European Union, retail investors usually buy ETFs harmonised under the UCITS directive, which sets rules on diversification and on holding assets separately. To buy them you need an account with a broker licensed by the ASF or another EU regulator.
Which rules apply in Romania in 2026?
Taxes and private pensions change how much of a gain you keep. The original rules in this table were checked on 27 September 2026; the cap on non-bank consumer loans was checked on 19 October 2026. Each row has its source.
| Rule | Value | In short |
|---|---|---|
| Interest on deposits | 10% | Final tax, withheld by the bank. Fiscal Code, art. 97(1)–(2). source |
| Dividends | 16% | On dividends paid from 1 January 2026 (10% before; dividends on 2025 interim accounts stay at 10%). Law 141/2025. source |
| Gains on shares sold through a broker that withholds tax in Romania | 3% or 6% | 3% if held at least 365 days, 6% if less; withheld at source on each profitable sale. From 1 January 2026 (1% and 3% before). Law 239/2025. source |
| Gains through a broker that does not withhold in Romania | 16% | On the net annual gain, declared by you in the single tax return (Declarația unică). From 1 January 2026 (10% before). Law 239/2025. source |
| Health contribution (CASS) on investment income | 10% of a fixed base | Only due if investment and other non-salary income reaches at least 6 minimum wages a year; the base is 6, 12 or 24 minimum wages, in steps. Fiscal Code, art. 170. source |
| Interest on government securities (Tezaur, Fidelis) | 0% tax | Income from government securities is not taxable. Fiscal Code, art. 93(1)(a). source |
| Pillar II pension | 4.75% of gross pay | Part of the 25% pension contribution goes into a personal account run by a private fund. Generally compulsory for anyone insured at up to 35 years of age. source |
| Pillar III (voluntary pension) | €400 a year | Your contributions are deducted from taxable salary income, up to €400 a year. Fiscal Code, art. 78. source |
| Salary: deduction for buying shares, bonds and ETF units | Up to €400/year | Up to the RON equivalent of €400 a year from the salary-tax base. At the employer for your declared main job (funcția de bază), from March 2026 salary income, for instruments paid for and settled from 1 March 2026. The deduction applies in the settlement month, using documents issued by eligible entities under Article 96¹(1); not every broker qualifies. Transaction costs are excluded. At a 10% tax rate, using the full allowance may reduce tax by up to the equivalent of €40, depending on the taxable base available. The cap is separate from Pillar III. OUG 8/2026, Article 6 point 34 and Article 10(11). Checked 18 October 2026. source |
| Bank deposit guarantee | €100,000 | Per depositor, per bank, if the bank fails. Law 311/2015, art. 61. source |
| Investor compensation | €20,000 | If the broker cannot return your money or securities. It does not cover falling prices. Law 88/2021, art. 5. source |
| General APR cap on consumer loans from non-bank lenders | 34.50% a year on 8 October 2026 | Law 243/2024 defines “consumer credit” as credit of up to 100,000 lei, repayable within five years, and not secured by a real-estate mortgage (Art. 2(f)). For covered consumer loans from IFNs, the general APR cap is the BNR Lombard rate plus 27 percentage points; BNR kept the rate at 7.50% on 8 October 2026. By exception to the general APR cap, total credit costs per day are capped at 1% for loans up to 5,000 lei, 0.8% for 5,001–10,000 lei, and 0.6% for 10,001–25,000 lei. In each band, the total amount repayable cannot exceed twice the credit amount. Checked on 19 October 2026; recheck after any Lombard-rate change or by 19 November 2026. source |
The original rules were checked on 27 September 2026; the investment-purchase deduction was checked on 18 October, and the non-bank loan cap on 19 October 2026. Check the law before making a decision.
Glossary: every word on its own page
Each term has its own page, with a one-sentence definition, an example in lei and a link back to the story above. It is the page to send someone who asks "what's an ETF?".
- APR (DAE)The total yearly cost of a loan, interest and every fee included, as a percentage.
- BondA loan you make to a government or company, in exchange for interest agreed in advance.
- Budget deficitHow much the state spends above what it collects in a year; the gap is covered by borrowing.
- Compound interestInterest on interest: last year's gain earns a gain of its own this year.
- Deposit guaranteeIf a bank fails, the Bank Deposit Guarantee Fund, financed by the banks' contributions, returns up to €100,000 to each depositor.
- DiversificationSpreading money across many different investments so no single one decides your fate.
- DividendThe part of profit a company pays its shareholders, usually once a year.
- ETFAn investment fund that tracks a basket of shares or bonds and whose units trade on the stock exchange, like shares.
- Fund costs (TER)The percentage a fund keeps from your money every year, whatever the result.
- Government securities (Tezaur, Fidelis)Loans you make to the Romanian state, at a fixed rate and free of income tax.
- Index fundA fund that buys the whole index, without trying to pick winners.
- InflationThe pace at which prices rise: the higher it is, the less each leu buys.
- Pillar II pensionThe part of the pension contribution that goes into a personal account run by a private fund.
- Pillar III pensionA private pension you join voluntarily, with a tax deduction of up to €400 a year.
- Public debtEverything the state owes, built up from past deficits; paid with interest out of today's and tomorrow's taxes.
- Real interest rateThe rate on paper minus inflation: it shows whether your money buys more or less.
- ReturnHow much an investment gained or lost, usually as a percentage per year.
- Risk and volatilityHow much, and how often, an investment's value jumps up and down.
- Rule of 72Divide 72 by the yearly rate to find, roughly, how many years it takes a sum to double.
- ShareA small piece of a company, giving you a claim on part of its profits and value.
- Sovereign ratingThe grade agencies such as S&P, Moody’s and Fitch give a state's ability to pay its debts.
- Stock exchangeThe market where shares, bonds and ETFs are bought and sold, through brokers.
- Tax on investmentsWhat the state takes from interest, dividends and gains on selling shares, in 2026.
No term found. Try a shorter word.
The glossary by topic, including the state's money: deficit, public debt, rating →
Sources and method
Mattress: the sum divided by the rise in consumer prices (CPI, INS) from the end of the year before the one chosen to July 2026. BNR simulation: the model converts the annual average rate published for each month's new household lei term deposits into a monthly factor and compounds it month by month, before tax; this hypothetical index is not a contract or an annual-renewal strategy. The sum is then brought to July 2026 prices. Stocks: the US total-return index from Shiller's file, in dollars, converted to lei at the BNR monthly average rate and brought to Romanian July 2026 prices.
Holding periods: every starting month from January 1871, annualised real return with dividends reinvested. Twins and costs: contributions at the start of each month, a hypothetical constant real return, no taxes.
This page explains mechanisms and shows what happened in the past. It does not recommend products, say what to buy, or take your situation into account.
- INS, TEMPO-Online: consumer price indices (IPC101A, IPC102A, IPC102B, IPC102E)
http://statistici.insse.ro:8077/tempo-online/ - National Bank of Romania, Interactive database, series N14RL_DGN: average rate on new household time deposits in lei (% per year)
https://www.bnr.ro/1074-baza-de-date-interactiva - BNR daily reference exchange rates, yearly files
https://curs.bnr.ro/ - Robert J. Shiller, monthly US stock market data (ie_data.xls), accessed 27 September 2026
https://shillerdata.com/ - Dimson, Marsh, Staunton, UBS Global Investment Returns Yearbook 2026, public summary edition, pp. 7–8
https://www.ubs.com/content/dam/assets/wm/static/cio/documents/giry2026-summary-public.pdf - MSCI World Index factsheet, 31 August 2026
https://www.msci.com/documents/10199/178e6643-6ae6-47b9-82be-e1fc565ededb - S&P Dow Jones Indices, SPIVA Europe Scorecard, Year-End 2025, report 1a
https://www.spglobal.com/spdji/en/documents/spiva/spiva-europe-year-end-2025.pdf - BNR inflation target: 2.5% ± 1 percentage point
https://www.bnr.ro/2484-obiectivul-politicii-monetare - Law 141/2025 (dividends)
https://static.anaf.ro/static/10/Anaf/legislatie/L_141_2025.pdf - Law 239/2025 (capital gains)
https://static.anaf.ro/static/10/Anaf/legislatie/L_239_2025.pdf - Fiscal Code, consolidated text published by ANAF
https://static.anaf.ro/static/10/Anaf/legislatie/Cod_fiscal_norme_2023.htm - Law 243/2024 on consumer protection against the total cost of credit
https://legislatie.just.ro/Public/FormaPrintabila/00000G00UV20PVA2AHS138LVCV34SAV2 - Law 88/2021 on the Investor Compensation Fund
https://asfromania.ro/uploads/articole/attachments/60e701306c71f182334998.pdf - OUG 8/2026, salary-base deduction for investment purchases
https://legislatie.just.ro/Public/DetaliiDocumentAfis/307580 - BNR, 8 October 2026 decision: Lombard rate held at 7.50%
https://www.bnr.ro/25929-2026-10-08-hotarari-ale-ca-al-bnr-pe-probleme-de-politica-monetara - ECB, MFI interest-rate statistics: definition of new business and individually agreed rates
https://www.ecb.europa.eu/stats/financial_markets_and_interest_rates/bank_interest_rates/mfi_interest_rates/html/index.en.html