How To Invest In A Crisis

Everyone is trying to find the most profitable option to invest their funds. And saving capital in a crisis period is the main task of any investor. Beginners and inexperienced under fear of losing the latter «turn down the rods», withdrawing assets. During the sharp swings in the currency market, many lack the nerves and patience to stay in the game. However, the experts of their business try to look at the crisis situation with their eyes wide open and find ways in it not to retreat, but to increase their capital. Experienced investors, not the first year spinning in this sphere, always adhere to a simple rule: buy when others get rid of their assets quickly, selling for pennies.

What Principles Should A Successful Investor Be Guided By?

In order not only to hope, but also to receive real capital gains, any investor must know the basic principles and approaches to competent investment.

You can’t stop working. Whatever changes the market is undergoing, whether it’s a take-off or a sharp jump down, to stop investing is a stupid idea. Using the «averaging» strategy understood by everyone, you can always stay afloat.

Guided by this principle, it is much easier and more efficient to spend personal capital on asset purchases than to worry about whether forecasts of market trends will come true. Such a strategy in operation allows at various intervals at an average price to acquire property or shares and earn profit. You need to have a clear investment plan, and then success is guaranteed.

You always need to use the situation in your favor! How do I do that? The next strategy is to invest in financial instruments that yield profits not ever, but mainly during times of crisis in the market.

A hedge fund is perhaps the perfect option for an investor. Minimum risk, maximum income. This is achieved by the fact that all assets are managed exclusively by professionals and only in favor of the investor, using rather complex trading strategies. Having such investment fund behind the back, it is possible not to worry that during the crisis period the portfolio of shares will fall in price – on the contrary, it is necessary to expect flow of the capital.

However, there are also difficulties here. Such funds are not regulated by the State, nor are they available to anyone. In various countries, there are minimum initial contributions, but it can be said with confidence that there will be no place for beginners there.

Should we connect with assets such as gas, oil, precious metals, etc., during the crisis period? Another effective strategy in the work of the investor: it is not necessary to invest your capital in industry funds.

What’s this all about? The main thing is to clearly represent the development of the market in the near future, namely the development of the industry directly related to capital. It’s very difficult to do. You will never predict exactly how the price of oil will behave tomorrow, as evidenced by recent years in the economy of our country. Nor should we rely on the views and forecasts of even the leading analysts in this area, as even their opinions may differ greatly from each other.

During the crisis period it is impossible to risk and invest in PIF industry, it is much more reasonable to direct the capital to a suitable non-industry fund.

Investment Strategies

There are many different classifications that distinguish strategies by objects and entities, industries and economic spheres. In real life, there are only a few criteria by which an investor can characterize himself:

  • Activity frequency;
  • Attitude towards risk;
  • Way of decision-making.

In this regard, the following types of strategies are identified:

  1. Conservative. The safest way for an investor. The portfolio is formed from instruments that give 100% profit. This guarantees a stable income with minimal risk. These are mostly passive investors, if you consider them in terms of the nature of the activity. They do not make frequent deals, but prefer long-term investments. However, such a strategy is suitable, rather, for small traders who do not claim large profits.
  2. Aggressive. Generally, a contribution to securities that are directly dependent on economic performance is implied here. Investors choosing such a strategy, despite the huge risk, seek to maximize their income, squeeze everything to the last drop. Among such, there are many speculators who conclude more than one deal a day.
  3. Weighted or mixed. Guided by this strategy, part of the investment portfolio consists of risky instruments, part – of instruments that guarantee stable income. The figures for each of the assets will differ.

So, if an investor always has a well-defined action plan and adheres to specific strategies, capital increases are guaranteed.