2019 was worthy for investors to spend it with a glass of champagne, counting their earnings, but 2020 brought a lot of unpleasant surprises. Now many people are worried about the safest investment during pandemia times.
The pandemic has had a severe impact on individual markets, industries and economies of entire countries. Investors are asking themselves: what are the safest investment during pandemia times? There is always risk when investing, but many ways exist to keep savings in the current economic climate.
Some of them are less risky, for example, the purchase of defensive assets such as gold and government bonds, while others carry more risks. These include stocks, especially securities of companies most affected by the global pandemic, as well as cryptocurrency.
In short, in such conditions, experts advise non-professional investors, as in the past year, to take measures to protect their money – to strengthen the portfolio with reliable instruments with a fixed income, reduce the proportion of shares, but one should not neglect the sharesof protective industries, ready-made investment products with limited or zero risk.
It is proposed to make money on individual investment ideas, although many experts believe that it is worth forgetting about earnings during the current crisis and it is much more important to focus on saving savings.
There are no safest investment during pandemia times
And yet, what are the safest investment during pandemia times? First of all, you must understand and always remember that with any investment there is always a risk. Even the safest investment can never give you a 100% guarantee of success. In these uncertain times of this year, investing can be compared to gambling, because it turns out that you are very much forced to rely on chance.
That is why the concept of the safest investment during pandemia times has only a relative meaning, it is just a comparison with other types of investments, and they also involve a risk, only slightly less. There is no such thing as a completely safe investment! In addition, the greater the potential return on investments, the more risky they are. Now that you have known this, you can move on by considering the most secure types of investment in the current situation.
Cooperation With Capital Manager
There are stock market specialists who take into trust the investment capital of ordinary small investors. These financial planners will help you enter the stock market to invest in it. Wealth managers have investment expertise and may have a different opinion on capital management from yours.
- First of all, they will study your financial situation in order to analyze the opportunities and risks for your money, after which they will make a decision on exactly where, how much and in what proportion to invest your capital. Again, this way of investing with a money manager can be one of the safest investment during pandemia times, but without your control. Moreover, even experts can make mistakes, putting your money at risk.
- If you have a desire to invest in certain exchange-traded assets, you tell your investment manager so that he analyzes your suggestion. Trading on the stock exchange is attractive and reckless in its own way, and an experienced financial planner can calmly and correctly assess the risks and inform you about them.
This will help you not to be led by your emotions by making a too risky trade. Further, a financial manager based on your wants and preferences will help you distribute your investments, form an investment portfolio and strategy. It is worth meeting with your money manager regularly to keep your finger on the pulse and understand what is happening with your money, so that this way is one of the safest investment during pandemia times.
How Safe Is Cooperation With Asset Manager
Despite all the advantages of investing with a professional financial planner, it nevertheless carries a significant risk, since in this case you entrust your money to another person, and it always carries a certain risk in one way or another.
Before entrusting the management of your finances, it is important to check well who you are going to entrust. It is worth making sure that he is a certified specialist, has a reputation as a reliable person and has all the necessary insurance.
Government Savings Bonds
One option for the safest investment during pandemia times is government savings bonds. Government bonds are a tool for investing money and generating income. In fact, this is the same deposit, only not in a bank, but in the Department of the Treasury: you invest your money, and after a while you get it back with interest.
These securities, which are divided into two types, are issued by the United States Treasury. Government bonds are either savings or treasury bonds. You just need to invest $ 25 or more in one savings bond.
It is quite affordable even in these difficult times. To start investing in the government, simply register, receive a treasury account and purchase one of the types of government bonds. More expensive – Treasury bonds will cost you from a hundred dollars.
How Safe Are Government Savings Bonds
Bonds can generate good returns and are generally considered safe investments compared to stocks. However, investors should be aware of some of the possible dangers and risks associated with owning government bonds.
When an investor purchases a bond, he essentially agrees to receive payments at a fixed or floating interest rate until the bond matures or as long as he remains the owner of the bond. But if inflation accelerates significantly, day-to-day expenses increase, and investment income does not keep pace with growth, then the purchasing power of investors decreases, and the profitability of their investments, taking into account inflation, becomes actually negative.
As long as the US government and treasury remain in place and pay their debts, your investments remain safe. However, the price of such security depends on inflation and changes in interest rates. This is always worth considering before investing in government bonds.
Another danger awaiting an investor is reinvestment risk – the risk that the income received will have to be reinvested at a lower interest rate than that of the previous income.
Bonds can bring stable income to investors and, depending on the issue, reduce overall portfolio risk. However, if you are going to try your hand at the bond market, you should be aware of the risks associated with this investment vehicle.
Insurance Companies’ Fixed Annuity
In a broad sense, annuity refers to a financial instrument’s maturity schedule in which payments are made periodically in equal amounts at regular intervals. The amount of the regular annuity payment includes part of the principal and remuneration.
When you invest in a fixed annuity, you pay the insurance company to manage your money and invest it for you, with a guaranteed return in case things don’t go as they planned. This is one of the most popular ways that Americans invest their money, as they are more invisible and allow experts to do most of the work.
No matter how well your portfolio is performing, you receive a fixed rate of return. The details of this rate depend on the company you are investing in and what the market is like when you set up your account.
How Safe Are Fixed Annuity
An annuity is an insurance contract that provides a stable income. A fixed annuity is a riskier instrument than a bank savings account or government savings bonds, but it is noticeably less risky than investing in the stock market without the help of a financial planner. You also gain less control over your money because someone else is investing it for you.
An annuity can be bought in one payment, or payments to an insurance company can be made for several decades. Although there are many varieties of this service, variable annuities, indexed annuities and fixed annuities are most common among Americans.
A fixed retirement annuity assumes a fixed income from retirement until the end of the life of the owner of this service. In turn, the variable annuity allows the client to select an investment that will determine the interest rate and the person’s future pension. An indexed retirement annuity generates income linked to various stock exchange indices.
The high cost of annuities is their biggest drawback. In addition, the annuity is often bought through brokers who receive a fairly high percentage of the contract. Conservative and inexperienced investors tend to buy fixed annuities.
Bank Savings Accounts
In fact, by creating a savings account, you lend your money to the bank, which it then uses for its financial activities, that is, it issues loans to other people and companies, that is, you invest in the bank. Money in such accounts is more mobile than in deposits, because they can be withdrawn at any time, so borrowing your money to the bank is one of the safest investment during pandemia times. For such borrowing of your money, the bank pays you an interest rate. This works in much the same way as when you take out a bank loan.
It is the ability to quickly use temporarily free funds without losing profit that attracts those who want to freely use their savings and make money on them. Savings accounts are most often used by newcomers in savings who do not have enough money to deposit, as well as experienced savers. The latter put most of their savings into deposits, fixing the profitability, and the rest are kept at hand in a savings account, like in a wallet.
Also, a savings account is used by clients who have a large amount of money in their hands for a short time. They want to receive income from it, but retain the ability to quickly transfer funds to other accounts.
How Safe Are Bank Savings Accounts
Clients value savings accounts for the flexibility of conditions, and banks – for the opportunity to demonstrate a high rate in advertising, at or even higher than on their own deposits. But savings account rates often only seem to be as beneficial as deposit rates. Few banks pay income at a single, independent rate.
The tariffs for the accounts of many banks are much more complicated, as they contain a lot of pitfalls for depositors. Income on them is accrued depending on various parameters, and sometimes on the transactional activity of the client using bank cards. If these requirements are not met, income may be less or even virtually zero. Therefore, we strongly recommend that investors carefully study all the conditions for placing funds before opening a savings account.
As for security, it is as secure as it is possible in principle, therefore it is one of the safest investment during pandemia times. The bank with which you have a savings account must be insured so that you do not have any problems getting money. Only a big crisis like 2008, which virtually bankrupted the banking sector, could jeopardize your investment in savings bank accounts.
What Is The Safest Investment Option In These Times
What the safest investment during pandemia times for your money actually can only be determined by you, since each of them has its own advantages and disadvantages. It is worth starting with probably the safest, albeit less profitable, and when you have more free money to invest, move forward.
Alternatively, you can use the expertise of people with deep financial knowledge to get a more powerful impetus in the development of your financial capabilities. Our experts are ready to help you plan your investments and finances in general. Write to us to get advice on any financial issues.