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67 percent of Swiss people are risk-averse when it comes to investing. This is demonstrated in a survey conducted by Vontobel with its customers. Two-thirds of those surveyed said they were “prudent in my investments” and tried to “avoid risks and potential losses as much as possible”. Even as risk aversion declines steadily with increasing wealth – even among the very wealthy respondents in the survey, the majority still describe themselves as cautious (with assets of CHF 52.1 million or more). An international study done last year by Stein Holden and Mesfin Tilahun also shows the gender quota: 83 percent of women avoid risks, compared to 58 percent for men, but still more than half.
So no risk. Instead, the reverse is required: security. It’s a state we’re longing for right now. No wonder, because crises overlap, financial markets have been tough for a while. Don’t Swiss investors deserve high praise for being passive and conservative at the moment? Personal financial “reduit strategy” not correct?
One flaw is clear: we are still in the midst of inflation. The value of the money saved decreases, the purchasing power is lost. The pitfall of this development: You do not see this implied loss in the bank statement. However, the loss of purchasing power particularly affects many Swiss, as the Vontobel survey shows that 40 percent of them hold more than half of their disposable assets in cash. So if you don’t mind investing your money, you could lose as much in the long run as an ill-considered investment without a strategy.
“Time in the Market” instead of “Market Timing”
So how do you react when neither defensive nor offensive tactics feel right? Many traders treat the stock market as they do with horse betting. They read a lot, learn as much as possible, and then act on their knowledge and beliefs: They’re literally trying to bet on the right horse. Where the shape curve should reach the top in the next race.
When it comes to investing, this attitude roughly corresponds to the term “market timing”. Many depositors are constantly looking for the perfect time to buy or sell. Just: Who always captures this moment? Securities often continue to rise after the sale or, contrary to expectations, depreciate after the purchase. The latest events in the Swiss financial market have confirmed this.
The probably smarter alternative to “market timing” is “time to market”, this strategy works more often. It says: You choose a long-term investment horizon and act accordingly, because the ups and downs of the stock market often stabilize over a long period of time. At a greater distance, an intense ascent and descent curve turns into a line that is ideally uphill. Risk becomes more manageable without the risk of losing wealth due to too much cash during inflation.
This investment strategy can also be defined as “Long Term, Low Risk”. Various forms of investment can play a role here as part of the long-term approach. One of them is dividend stocks. Confidence is clearly given here to companies that regularly distribute all or part of their profits to their shareholders. The investor is not only interested in making a profit with these securities. The dividend is part of the strategy. Regular distribution facilitates investment planning. Experience also shows that companies with higher dividends often outperform in uncertain times. Bonds can be another component of a long-term, low-risk strategy: they create a large amount of security because they set a fixed interest rate. At the end of the term, the amount plus interest is refunded.
Third, there are megatrends such as robotics, smart agriculture or wellness and health, even if they are considered riskier among long-term investments. In contrast, the yield potential is slightly higher. Megatrends describe major, long-term trends in the economy and society that can be identified today. Or to put it another way: Megatrends move like continental plates: unstoppable and independent of individual events. These are areas of investment that promise long-term growth and should be less reliant on hyperbole.
These are just a few of the components that can make up a long-term, low-risk strategy. And one thing is clear: it’s not entirely risk-free. But it also means “low risk” and not “no risk”. Learn more about long-term investing here.
Exactly how your own strategy looks and what investments it includes should always be individual and depend on your own investment goals. There is no universal patent solution. Personal advice from Vontobel experts is even more important. For nearly 100 years, experts have been taking an active and proactive look at their clients’ assets. With comprehensive advice, a well-founded risk strategy and individual solutions, they support investors in fully aligning their investments with their financial goals.
Source : Blick
I am Dawid Malan, a news reporter for 24 Instant News. I specialize in celebrity and entertainment news, writing stories that capture the attention of readers from all walks of life. My work has been featured in some of the world’s leading publications and I am passionate about delivering quality content to my readers.
