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Created on 22.05.2019 | Updated on 13.11.2023

More than just saving: investing in times of uncertainty

How will the economic situation change over the coming years? What kind of political and economic developments and events can we expect to see? For investors who feel a sense of uncertainty or expect stock exchange corrections, selecting the right financial investment isn’t an easy decision. Investment pros are facing similar challenges to inexperienced investors. But even in supposedly difficult times, there are still investments where the risk is manageable.

Financial crises, currency crises, debt bubbles, stock market corrections, interest rate changes – such events and developments on the financial markets live long in investors’ memories. It is no surprise that investors have become uncertain as a result and that they want their investments to pose as little risk as possible. But even careful investors can still invest money. The following types of investment are considered relatively crisis-proof:

  • Swiss corporate bonds  with good creditworthiness
  • Fixed-term deposits/medium-term notes in Swiss francs
  • Federal government bonds
  • Certain tangible assets
  • Cash

Secure financial assets come at a price

Certainty, returns and liquidity are three goals that are at odds with each other when it comes to investing. The lower the risk an investor assumes, the lower any average return generated. Finding a highly secure asset yielding an exceptional return is a near impossible task.

Bonds as an alternative

That said, there are investments that can yield attractive returns whilst still offering relatively high security: bonds. This is especially true of bonds in Swiss francs that have good creditworthiness, though they too still come with certain risks.

Bond values depend on market interest rates

When bonds are issued, the level of coupon  is in line with comparable, normal market returns. If the market interest rates fall during the term of the bonds, these bonds become more attractive, as an even higher coupon is paid out. If market interest rates rise, existing bonds fall in value, as the difference to the expected yield is offset by the price. Bonds with a short term therefore have a lower interest rate risk than those with a long term. These scenarios can occur because bonds bear interest at a fixed rate over several years, whereas market rates can change constantly. Although the risks are usually lower than with shares, losses can also be incurred on bonds.

Consider the foreign currency risk when buying foreign bonds

Exchange rates depend heavily on monetary decisions made domestically and abroad, as well as on economic trends. It is hard even for experts to predict how these exchange rates will behave. This means that careful investors should hedge ) their currency risks systematically against share price losses, or they should simply avoid securities in foreign currencies altogether. Bond funds also have instruments to hedge against foreign currency risks.

Convertible bonds offer greater flexibility

Many convertible bonds are considered conservative securities. Put simply, these are bonds that can be converted into shares in the issuing company. This provides investors with greater flexibility, but it’s important to bear some particular aspects in mind.

Long-term investing – the key to being successful with shares

Even though bonds are generally lower-risk investments, investors shouldn’t underestimate shares in difficult times. Investors with shares may feel the effects of crises and corrections more severely, but if you look back over a long period of time, you will see there has been a positive trend on the stock markets over the years. And so, those investing over a longer period of time in particular should also consider working with shares. As a rule of thumb, the longer your investment horizon , the bigger the equity component your portfolio can have. The reason for this is that, historically, many shares have recorded overall gains despite the fluctuations. This means that investors who are capable of and willing to take a bigger risk and stay invested in the long term can supplement their portfolio with selected shares and increase their prospects of making higher returns in the process. Investors who want easy access to their money and who are pursuing a cautious strategy should mainly stick with bonds or other liquid investments, such as money-market instruments.

Security through broad diversification in various asset classes

Don’t put all your eggs in one basket when investing. Whether you’re investing in bonds, equities or alternative investments, such as cryptocurrencies – a portfolio where the assets are invested in different classes, countries and sectors is a good way of hedging. If you make diversified investments in this way based on your own personal investor profile , you’ll minimize the risk of losing money if there is a negative market trend. As putting a diversified portfolio together isn’t easy and requires a high level of financial strength, funds  are a good option. As well as providing good diversification, funds enable even small amounts of money to be invested on a broad basis.

Diversification with crypto

What’s great about diversification is that you can customize your own investment portfolio, reflecting your own interests. A popular investment approach is the core satellite approach , in which around 80 percent of the portfolio is invested in broad-based investment funds according to the investment strategy, while the remaining 20 percent is invested based on personal preferences. For example, investment in future-oriented blockchain technology may be an option for diversifying, as cryptocurrencies generally have a low correlation to other asset classes. Anyone considering investing in cryptocurrencies needs to bear a few things in mind.

Areas such as real estate, gold and commodities are other options as satellites.

Diversification through thematic investments

Thematic investments are another way for investors to diversify and individualize their portfolio. These are investments focusing on a particular theme, such as renewable energy, artificial intelligence, food, water, etc. They differ from traditional investments through their focus on topics and megatrends rather than indexes, sectors or regions. Specially invested thematic funds or thematic ETFs  are good options for this.

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