Diversification is a key strategy to form a crisis-proof portfolio of assets. Investors must find sound investments in which to place their wealth while the crisis heavily impacts financial products.
Stock markets are highly volatile as traders panic-sell their stocks. On 16th March 2020, oil prices were at their historic lowest of 22.4 USD.
During these hardships, it is the tangible, full-ownership real estate properties which are considered a safe haven to secure one’s capital.
Diversifying one’s assets to mitigate the risks
Owning several assets such as both financial products and real estate means taking advantage of the strengths of each, while mitigating the risks of loss during crises. During favorable times, a good stock market investment can yield high returns, but it is not secured as you can lose the whole capital just as fast during crises.
On the contrary, real estate is a tangible and “stone” investment. It will stay no matter the economic situation : real estate prices can also go down during crises, but unlike stocks, the capital initially invested can not be entirely lost.
In a freehold investment, the investor and his designated heirs will always fully own the property, even if a systemic breakdown should occur. This is a secure asset, as the physical walls and stones do not depend on the fluctuation of the Stock market.
Diversifying currencies and countries of investment
Currency diversification is important to avoid depending on the value of a unique currency, and to profit from situational rises. The US Dollar for example is widely used in Southeast Asia and around the world.
In today’s crisis, it leads to the Dollar…