You don’t have to think too far back to remember the impact of a global economic crash can have on investors. The crisis of 2008 wiped millions off the portfolios with many unlucky prospectors, for example. However, when times are tough, and the investment markets are looking a little stormy, certain areas seem to hold up OK. In today’s guide, we’re going to highlight some of these ‘safe’ investment markets, and reveal where you should be putting your savings whenever there are threats to the global economy. Let’s take a closer look at some of your best options.
First of all, it’s vital to remember that there are no guarantees. There aren’t any investments that are always going to be 100 percent safe, and you will need to do your share of due diligence to ensure you don’t lose any money. While some of the markets listed below are thought to be safe, you never know what might happen – anything is possible. It is vital that you only invest money that you can afford to lose, regardless of how secure your perception is of any individual market. Finally, it’s also advisable to diversify your portfolio as much as possible to ensure all your financial eggs aren’t in the same basket. This way, if something does happen to a particular market, your risk will be spread, and the damage will be limited. OK, with all this in mind, let’s take a look at some of the best and safest investment options out there, starting with government bonds.
Bonds are used by governments all around the world to raise money. Investors buy them, and governments will offer them a guaranteed amount of interest that are repaid after a previously decided period. It could be months, or it could be years – even decades – before investors trade them back in. In short, it’s a little like investing in a company, only there is more likelihood of a corporation going bust than an entire country. And the returns you get as a result tend to be considerably smaller than the risk and rewards you can achieve for the average stock market investment. It’s the price you pay for safety, essentially. However, one thing to bear in mind about government bonds is that when a stock market crashes, lots of people pile into bonds very quickly. It means the prices go up, and while the rate of return remains the same, the yield you get will be reduced. That said, it’s a much safer option that trying to work out where to put your money when the stock market is in freefall.
Gold is the ultimate investment for many people, and still, holds a fascinating allure – as it has done for thousands of years. It’s not just investors that put their money in gold, either – major economies, corporations, and governments all do it, too. As a rule, gold is an excellent long-term investment, as it is a finite resource and a rare metal – it is often typical you could get returns of anything up to 12-15% in a single year. But, as Gold Signals points out, gold is a volatile market that moves around a lot in a typical day. And if you are getting into the game for short-term gain, it can be a little dangerous – you could lose a fortune. Your best bet is to view gold in the long-term, build up some reserves, and leave it untouched for extended periods of time.
On the face of it, currencies tend to be a reasonably safe long-term investment. But make no mistake about it, being overly speculative can lead to significant issues. There are plenty of things that can impact a currency, from periods of war through to the UK’s Brexit decision, which can lead to incredible turmoil. However, the vast majority of governments will often intervene by raising interest rates or flooding the market with their own currency to ensure that demand for cash is met. And over periods of 15-20 years, you will – in the vast majority of cases – find growth and return, rather than losses.
All markets can be affected by a financial crisis, of course. But it’s fair to say that some are a lot more robust than others. Take the financial crisis of 2008 again, and it was housebuilders that took a huge hit, as well as the banks. With so much property being left lying empty, there was no need for homes to be built, and it wiped significant chunks from the value of some of the country’s biggest homebuilders. If you have money invested in stocks like these, it could have bled you dry – unless you took your money and spent it in a stronger, globally spread company that has broader shoulders. Worldwide companies who operate in almost every continent – such as GlaxoSmithKline, Unilever, and Rolls-Royce – are almost always better bets in hard times than those that exist only in certain markets.
There’s a good reason why the world’s dictators try and vacuum up all the human race’s greatest works of art – because it is worth a fortune and rarely loses value. We’re not suggesting you don a burglar’s mask and rob the Louvre, of course, but investing in paintings, sculptures, and other artworks tend to give you return in the reason of 10% every year. While you will need some serious money to buy world-famous painting and artworks, it is a lot cheaper if you try and get involved in art investment at a more fundamental level. Tomorrow’s artistic heroes are probably out there right now, painting away in relative obscurity. And if you know your stuff nothing is stopping you from taking a gamble on them – who knows where it might lead you? Imagine picking up a Picasso in the early days and selling it on today – the returns could be unreal.
As we mentioned in the intro, no investment is actually safe. But these markets offer a reasonable amount of protection if you are prepared to pay the long-term game during turbulent economic periods. Good luck!