What investors can still rely on in times like this

It is not fun at all – but let’s take inventory here:

• Inflation rates in most of the strongest economic powers are currently on historic highs
• The world is just fading out of a global health pandemic that put markets under pressure and disrupted supply chains until a point where we now still feel the aftermath
• Geopolitical tension just rose tremendously after Russia decided on invading Ukraine: sanctions, steep rises in commodity prices, and short-term uncertainty

So, what is left to do? Piling up cash at home and waiting for better times? This is definitely the worst way to go since inflation will eat away hard-earned money. The central banks now admitted that their assumption of a “transitory inflation rate” and a “back-to-normal scenario” was unrealistic in the short term. We will have to bear with a strong loss of purchasing power the next time. Supposing the inflation rate stays around the level where it is at, 50.000€ would turn into 35.000€ in just 5-years if they are sitting in cash on your bank account.

Conservative asset classes

The central bank of the USA just announced their first rise of interest rate by 0,25% and predicted six more moves like this until the end of the year. Experts say this is a drop in the ocean in terms of fighting inflation. And coming from a negative base interest, those rises won’t make Government bonds a “sexy investment” – rates will go up to approximately 2% resulting in a net-margin of around -5% calculating inflation in there. Not an option for investors.

Real estate and commodities on the other hand look like just the right asset class to consider at this time of uncertainty. But those are conservative investments that are not expected to make big returns. Investors that are seeking attractive margins keep searching.

Equity Investments

The geopolitical tensions are putting equity markets into an unpredictable position. On the other hand, inflation is helping companies to attract more investments. Overall, stocks remain structurally much more attractive than bonds. Before looking for promising companies, however, one should narrow down the search to a few promising sectors.

Attractive industries

Technology has been the best bet for the past decade: the market was growing to a big degree and tech stocks outperformed the overall economy drastically. But there is one sector that escaped the hype around technology and is therefore not overvalued like tech stocks: healthcare.

The health sector is particularly attractive because it is, just like the technology sector, growing faster than the overall economy. Unlike IT, however, future growth in healthcare is certain, not merely due to an aging population or a global rise in health issues but also due to the digital jumpstart healthcare received by the global pandemic.

Still, many investors are afraid to invest in the healthcare industry due to their lack of understanding for this market. Aescuvest is a healthcare dedicated FinTech that has re-invested deal-by-deal venture capital investing. With a strong team of experts behind the curtains, analyzing market and portfolio companies, Aescuvest investors get only the pearls of the market served on a silver plate to build their healthcare investment portfolio.

Companies in the healthcare sector are and will remain a promising investment opportunity, even, or especially, in a crisis.

#investinhealth with Aescuvest