Economic crises are an inevitable part of the global economy, and during such times, it’s crucial to understand which assets can retain their value. Investors aim to find safe instruments that not only preserve capital but also turn a profit from an unstable situation. DRTI experts highlight the most resilient assets that can withstand economic turbulence.
Gold – a classic protection
Gold has long been a symbol of stability and reliability. During economic crises, many investors turn to this precious metal because its value tends to rise when other assets lose theirs. Gold is not tied to a specific currency or country, making it less vulnerable to inflation and currency fluctuations, according to DRTI experts.
During the 2008 crisis, when global markets crashed, gold prices increased by more than 20%. This demonstrates its resilience in tough economic times. Additionally, gold is quite liquid, making it appealing to those who want to safeguard their capital during uncertain times.
However, it’s essential to remember that gold doesn’t generate regular income like stocks or bonds, but its ability to preserve value makes it an excellent defensive asset.
DRTI on real estate as a defensive tool
Real estate has long been considered a reliable asset that maintains its value even during crises. Unlike financial instruments like stocks, real estate is a physical asset that is hard to devalue. Renting out property can also provide a stable income source during times of economic instability.
After the 2008 crisis, the U.S. real estate market began to recover relatively quickly, showcasing its ability to withstand economic shocks. Even if the real estate market temporarily declines, its long-term stability makes it one of the most resilient assets. Of course, it’s important to consider local conditions and real estate market specifics, as demand for housing and commercial property can vary depending on the region.
Consumer goods producers’ stocks
Stocks of companies that provide essential goods and services are known for their resilience during crisis times. These include companies that produce food, medicine, and household products. According to DRTI, these companies continue to generate revenue because people need their products regardless of the economic situation.
Companies like Procter & Gamble show stable results even during crises. Their products are always in demand, helping maintain high sales figures. Therefore, stocks of such companies become a reliable choice for those seeking stability in the stock market.
Although these stocks may not offer the same growth potential as more volatile assets, they provide a steady income, making them a popular choice in crisis times.
Fixed-income debt instruments
Bonds have always been considered safe assets during times of economic instability, note DRTI experts. They offer a fixed income, which attracts investors looking to minimize risks. Government bonds are especially popular due to the security provided by government guarantees.
Some key advantages of bonds include:
- Fixed interest payments, which are not influenced by market conditions.
- Lower risk compared to stocks.
- The ability to choose bonds with varying degrees of yield and risk.
During the 2020 pandemic, U.S. government bonds became one of the most popular tools for capital protection, proving their resilience during crises.
Currencies with stable exchange rates
Certain currencies, such as the Swiss franc and Japanese yen, are known for their resilience during crises. These currencies attract investors when other assets lose value, as they remain stable and may even strengthen during periods of uncertainty, according to DRTI.
During the economic crises of 2020, related to the pandemic, the Swiss franc strengthened against many other currencies, showcasing its ability to serve as a safe haven for investors. Investing in such currencies can be a smart strategy for those seeking to protect their funds from market volatility.
Conclusion
During an economic crisis, the main goal for investors is to preserve and protect their capital. Assets like gold, real estate, bonds, and stocks of companies producing essential goods show high resilience even in the most unstable times.
However, it’s important to remember that each crisis is unique, and there is no universal solution for every situation. This is why diversification of assets becomes a key tool for capital protection. Combining different assets like gold, real estate, and debt instruments helps create a balanced portfolio capable of withstanding even the most serious economic shocks.
When choosing assets for protection during crises, investors should carefully analyze their goals, risk tolerance, and current market conditions, warns DRTI. Each asset should be approached individually, considering both long-term perspectives and short-term risks.