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Saving and Investing 10 June 2020

How to minimise investment risks in a new Covid-19 world

A global crisis that is felt internationally and locally can have many far-reaching consequences, but the biggest tends to be uncertainty.

Investors are currently faced with myriad challenges and questions, and unfortunately there is no crystal ball that can reveal what the future holds.

These challenges include:

  • If it makes sense to move funds while local currencies are so weak
  • If investments should be diversified as soon as possible to protect portfolios from further upheavals
  • If exchange rates will improve – or fall further
  • How socio-political risks will continue to impact local investments

Some investors may be hesitant to move funds now as local currencies weaken against foreign currencies. Others are taking the view that local currencies may weaken even further – particularly if a second or even third wave of the coronavirus occurs. 

Navigating investment decisions

While investors should speak to their financial advisors before making any decisions that will impact their portfolios, there are a few key points to consider as we navigate these turbulent times .

Take a long-term view. As an investor, rather consider taking a long-term strategy if you can and externalise funds regularly. In this way you will benefit from the best rate over a period of time. 

Focus on low-risk investments. You can invest in international markets through low-risk investments such as Capital Protected Investments. 

Diversify your portfolio. Diversification of investments is more important than ever during tumultuous times if your goal is to protect your investments.

Unlock the benefits of international markets. International markets give your money exposure to mature markets and the potential for growth in various currencies. Mature, regulated markets can also be more secure. 

Hedge your earnings. Investing in international markets will give your money a hedge against the main currency you are earning in, particularly if that currency experiences volatile exchange rate fluctuations. 

Rebalance your investment. Are there other opportunities within your current investment portfolio that you can leverage? Your financial advisor will be able to assist you.

Is there a good time to invest during Covid-19?

Every investor’s personal goals are different, and these should be considered before making any decisions during a global pandemic.

Some investors may be hesitant to move funds now as local currencies weaken against foreign currencies, while others may take a view that their local currency may weaken even further. The decisions you make should ultimately align with your overall needs, and whether your investments are long-term or short-term. 

Investments to Consider

There are a number of different investment vehicles available through Standard Bank that will assist you to diversify your portfolio and start investing in international markets.