Considering the extraordinary and unpredictable situation prevailed these days, many investors are in dilemma as where to invest and where not to. Economists now are advocating a recession upfront, which makes investors decision a very tough one to take.
Choices are clear, recession is imminent and investors must consider “recession” in their investment strategy to overcome the economic distress we are going to face worldwide. It is not only the problem for a small developing country like Nepal, in fact powerhouse like America, China, Germany are also going to be badly hit by this extraordinary circumstance.
Recession does not mean investment has to be on hold. Although we are in a difficult period, we have history for our references, as many opportunities had been created in this type of situation. Only thing investors must do is make a smart move in their investment strategy.
We are going to discuss some investment strategies here which might help in smart move during this period:
Risk Averse Investment
As we know changes are inevitable, so, this would not be the best time to experiment and invest in a risky platform. It is better for the investors to mold their investment strategy into a safe risk-averting strategy.
In these extraordinary circumstances, it is better not to spend in highly speculative and leveraged companies. The focus should be on the simple investment; go by the rule; invest on the companies with better cash flow and low debt for the safest investment strategy.
Investment in consumer essential products
The prime focus of investment in this circumstance can be in essential goods, which are necessary utility for day to day consumption of consumers and which are unlikely to be affected even in any unpredictable situations. Essential items here we mean are typical products such as food & beverage, household goods and hygiene products. They might even include items like alcohol and tobacco.
These goods are such products for which consumers might not cut their budget off even in any distress situation. They are always in demand no matter how well or not economy is performing. So, investing in an essential goods business and equity stock related to staples goods might be the best investing option in these circumstances.
Investment in Agriculture Industry
It is not hidden to anyone, COVID-19 had impact on different sides of economy around the world with some exception like agriculture, pharmaceutical products, essential goods and so on.
We have experienced that, there is immense demand of agricultural and poultry products even during the lock down period. Sectors like food & agriculture, health and medical related industries can run without any hinderances with some safety measures to be opted on instruction, provided by WHO.
COVID-19 has emphasized the importance of the agriculture sector across the world because of its potential to support economic growth, create and sustain jobs and boost exports.
Due to the demand of fresh foods around the world, investors can create many opportunities of earning through investing in agricultural and poultry sectors.
It is a consistent revenue generating economic sector contributing to world economy and we can expect attractive revenue no matter how good or bad economic condition is. So, agriculture and Poultry industry can be a best investment strategy in this period of unpredictable and distress circumstances.
Investing in Real Estate
Even though many industries are being seriously hit by this pandemic, real estate is the best investment options which eventually supply best return after pandemic, provided wise investment are done.
Recession usually leads to the drop in value of home and land, so, it might be an exceptionally right time for investor to buy property in lower price and sell it in much higher price when pandemic ends and price rises back.
Investors can also earn a passive income in this period by renting their property for the time being.
E-commerce and Digital Platform
Due to COVID-19; importance of digitalization has been highly emphasized as a choice to cope up with this unpredictable circumstance. People are reluctant to visit places, communal presence has been a threat; act as a likely medium for spreading COVID-19.
Virtual marts, e-commerce, digital platform is in high demand these days as it can reduce the physical presence of consumer in the market. Moreover, down the line, we cannot imagine a business without digitalization and technology no matter what the situation is.
It is in investors best interest to invest in digitalization to cope with current as well as future market.
Another sector we have seen unaffected by pandemic is pharma industry, as the pandemic does not seem to slow it down; in fact, more money has been invested in it even in this unprecedented circumstance.
Moreover, no matter how good or bad economy is, demand on pharmaceutical product has least drop down recorded in its value and is ever increasing. Business man has been earning high share of benefit during this circumstance as seen in global market, even the opportunists are seen to have a huge fortune of earning as a situational business.
So, not only during this type of circumstances, pharma industry seems to have earned a prominent level of return but in a normal situation too, investing in a pharma company is a very profitable investment.
These are the investment you can count on this type of unprecedented circumstances. This is a distress period, everybody and every sector are searching for the best alternative to hang on in this market and capitalize once the pandemic ends. Hopefully, above strategies can help investors minimize risk of losing investments and have a best rate of return at their disposal.