A crisis can be frightening, but for smart investors it is also an opportunity. Do you know how to protect and grow your money when the markets are shaking to their foundations? We will show you what to invest in, what to watch out for and how to profit from this period of uncertainty.
Investing in times of crisis: Yes or no?
At first glance it looks risky. A crisis is simply a crisis; it brings economic uncertainty with it and often raises fears of falling markets and the loss of assets. However, history proves that crises:
- bring opportunities to buy quality assets at favourable prices;
- markets always recover after slumps.
The right question should therefore not be whether to invest, but what to invest in during a crisis. That way you can not only protect the value of your assets, but even grow it.
How do we recognise that a crisis is approaching?
A crisis is usually preceded by certain warning signs:
- Economic indicators: A drop in GDP, rising unemployment, wage stagnation.
- Market behaviour: Significant fluctuations on the stock markets or falling prices of certain commodities.
- Geopolitical events: Political instability, a pandemic or natural disasters.
For you as investors, it is crucial to follow the news and analyse market trends, so that you can better estimate the impact of these events and think through in time what to invest in before a crisis.
Diversification of investments and stable assets are key.
How does a crisis affect the investment markets?
Each type of asset reacts differently to economic turbulence. Let's take a look at specific examples from past years:
- Real estate: During the mortgage crisis in 2008, property prices fell by an average of 15 %. Nevertheless, they retained their real value and later recovered, which makes them a relatively safe asset. If you are thinking about what to invest in during a crisis, real estate is one of the key options.
- Stocks: The S&P 500 index recorded a fall of more than 50 % during 2008. Unlike real estate, however, stock indices reached new highs in the following years. Individual stocks can lose 100 % of their value, though, especially in the case of companies on the verge of bankruptcy.
- Gold: It usually strengthens in times of uncertainty. During the 2008 crisis, gold increased its value and remained stable even during further economic upheavals.
What not to do with your money in times of crisis?
Avoid the following mistakes:
- Panic selling: Quickly getting rid of assets when they fall often only means that you turn a theoretical loss into a real loss.
- Timing the market: Attempts to estimate the best moment to buy or sell mostly fail.
- Insufficient diversification: Investing in only one asset class can be fatal.
- Investing in unstable companies: Do not put money into companies that you are not sure will survive the crisis.
- Hasty changes to your investment strategy: A crisis requires considered actions, not sudden about-turns without thorough consideration.
Reading tip: Are you only just starting out with investing? Learn the basic principles and avoid unnecessary mistakes thanks to this guide: The basics of investing, or How to start investing
How and where to invest in times of crisis?
The best strategy is a combination of protecting your money and sensible investing. In doing so:
- Focus on stable assets, such as real estate, gold or government bonds. They are a proven choice for protecting assets.
Tip: If you are planning to buy an investment apartment, read our guide: Investment apartments: Advantages, risks and practical advice - Have a long-term strategy and avoid giving in to emotions.
- Defensive stocks: Sectors such as healthcare or consumer goods, which have stable demand even during a recession.
- Regularly invest smaller amounts, in order to reduce the impact of market fluctuations.
- Use platforms such as InvestBay, which offer clear and transparent information.
- Do not forget about diversification: A combination of stocks, bonds, commodities and real estate reduces the risk of losses.
Reading tip: Do you want to find out how to measure the effectiveness of your investments during a crisis? Learn to calculate return on investment (ROI).
How does InvestBay help with investing in times of crisis?
InvestBay makes it easy to get started with micro-investments in real estate. All you have to do is register, choose a project (or projects) from the currently available investment properties and watch how your money works.
InvestBay offers a safe path to investing thanks to the crowd-owning model. You can own a share of properties without having to deal with their management or high entry costs. This method answers the question of how to invest in times of crisis, and allows you to diversify your portfolio even during economic uncertainty.
The platform offers:
- Low entry costs: You can invest from as little as CZK 2,500. And that either as a one-off, repeatedly, however you like.
- Profit from rent and a share of the return when the property is sold.
- Ease of use: The entire process from registration to choosing an investment is simple, intuitive and transparent.
- Diversification: The ability to invest in different types of properties in different locations.
- A holiday home at a discount: As an investor, you get the option to stay in the properties at a discount.
Micro-investments in real estate through InvestBay bring a further advantage, however – the ability to invest even smaller amounts with minimal worries about property management. Investing in real estate this way is easy and accessible even for beginners.
Smart investing during a crisis
A crisis is not just a threat, but also an opportunity for growth. Investing in times of crisis requires a strategy, calm and a long-term plan. If you know what to invest in during a crisis, and you avoid the basic mistakes, you can on the contrary strengthen your finances. Consider your long-term goals, invest sensibly and let your money work for you. Register with InvestBay and discover how to achieve great results even with small amounts!
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