Wealth Creation

6 Best Investment Strategies for Beginners to Follow in a War

Losing money in investments is what most investors dread during a war-like situation. With an ongoing Russia-Ukraine war, investors have been forced to worry about their assets. With the stock and crypto markets witnessing a downfall, is it time for investors to redesign their investment strategy? Some people may believe in the fact that all markets recover after a certain period after the end of the war. Well, there is nothing wrong with it. However, it is also true that a war-like situation poses a great threat to some types of assets. Should you review your investment strategy then? Absolutely. Here are some investment strategies for beginners to follow during the war. 

Investing in Certain Options: Digital Gold, Silver, and SIPs

Some assets like gold and silver act as a perfect hedge against market downturns. This is why most smart investors believe in accumulating gold and silver in their portfolios, adding up to at least 10-15% of their portfolios. This helps in balancing your portfolio when the other assets in your portfolio are decreasing in value. As we can see in the history of gold and silver prices, they have always increased over time, helping investors gain control over their finances and protecting their money. 

Then if you consider the longevity of a war-like situation, nobody can actually time the end of it. A war may end in a month or stretch up to several years. In such a situation, the best way to invest is to put your money in funds that offer long-term returns. One such example is SIP or a systematic investment plan. Here, the investors invest a predetermined amount of money every month whose value keeps on fluctuating. However, when considered in the long run, SIPs have always generated good returns for the investors. 

Diversification of Portfolio: Investment Strategies for Beginners

Secondly, diversification of your portfolio is an unsaid rule of literally any investment strategy. Putting all your eggs in one basket creates a big chance of all your eggs rotting at the same time. You definitely do not want such a situation to happen with your money. Therefore, while investing during war-like situations, keep a diversified portfolio among several safe assets. For example, you can invest 15-20% of your money in gold and silver, 5-10% of your money in SIPs, less than 5% of your money in cryptocurrencies, some portion in real estate, and some in blue-chip stocks. 

Also Read: How to Diversify Your Portfolio in Gold and Silver?

Adopt a High-Risk High Return Way

In a war-like situation, one of the best investment strategies for beginners is to invest in funds with high risks and high returns. Taking advantage of the crisis is how smart investors make money during an ongoing war. Since the world is engulfed by uncertainty about the future during such times, the best way to invest is to make instant money. Short-selling funds and equity index futures are some examples of assets where investors can try their hand at this investment strategy. In short selling, the investors buy the assets that they do not previously own. They do it with an aim to buy them at lower prices and then sell them at higher prices to make profits. Similarly, there are inverse ETFs where investors get a 1, 2, or 3% return for every 1% negative return in the underlying index fund. 

Redefine Your Financial Goals: Investment Strategies for Beginners

Reviewing and redefining your financial goals is extremely important with a war-like situation in place. You may have invested your money some ten years back with a plan to achieve your financial goals in the next five years. But the plan didn’t take the market downturns due to war into consideration. Now that some of the assets in your portfolio are underperforming and will take time to recover, it is important for you to redefine your financial goals and ways to achieve them. This not only helps you in fulfilling your financial targets but also helps you in improving the returns on your portfolio. 

Stick to a Long-term Investment Strategy

While it is okay for investors to adopt a high-risk high-return strategy of investment, it is completely foolish to stake all of their money in this strategy. As we mentioned above, diversification of portfolios among a variety of assets is very important. So, you may take the short route to generate instant gains, but it is always advised for investors to maintain their long-term investment goals in the face of uncertainty like the Russia-Ukraine conflict. After redefining your financial goals, plan a brand new investment strategy that helps you achieve those goals. 

Buy Smart and Experience Gains: Investment Strategies for Beginners

During the financial market crisis posed by war-like conflicts, a lot of desperate investors begin selling their assets for a low price to escape further devaluation of their assets. The selling prices are often lower than the intrinsic value of the asset. So buying those assets from such fearful investors is like filling your bags during a sale. This is where smart investors come into the picture. They buy these low-priced assets having a higher intrinsic value. They aim to hold on to these assets for a long time, supposedly till the end of the war. This enables them to invest their money in valuable assets and generate long-term profits from them. Their entire course of action is hinged on the fact that the markets consisting of assets with good intrinsic value always recover to their original prices at the end of the war. 

However, this investment strategy requires investors to keep their senses open and do their due diligence while finding the intrinsic value of an asset. The intrinsic value usually refers to the actual value or utility of the asset of the company to the world. 

Final Thoughts

As you can see, gold and silver are must-have elements of an investment portfolio. In case you have not invested a chunk of your money in these precious metals, it is the right time for you to do so. Download the OroPocket mobile application today and start investing in digital gold and silver.