Investing in times of war and high inflation. The most attractive business areas (and tips not to lose money)

 Investing in times of war and high inflation.  The most attractive business areas (and tips not to lose money)

It is often said that in every crisis there is also an opportunity. And the one we’re experiencing – with the war in Ukraine, rising inflation, limited energy and food supplies – is no exception. If you have money to invest, there are now areas that are more attractive. And other investments that, despite appearing to be the right ones, need to be analyzed from a different perspective

Before committing to reading the directions in this article, stick to this motto: the investment process is always personal and it is essential that you seek advice from experts and gather as much information as possible before dropping the money. The advice comes from the experts CNN Portugal spoke to. An investment that makes sense to you may not make sense to your loved one.

Fuel goes up. Should I buy oil stocks?

The fuel price has gone up. But is it therefore right to invest in an oil company? João Sousa, financial affairs specialist at Deco Proteste, recalls that the stock markets have experienced significant fluctuations. But “not everything falls apart,” he says. Globally, shares of oil companies gained 36%. Bonds of companies in the defense sector, he adds, were up nearly 32%. In the pharmaceutical market, 4%. Sectors like this could bring more stability to those who invest. But the caveat remains: the investment must be made with a long-term perspective, of five to ten years, to give the market time to recover. “And it is necessary to accept that the journey, in the near future, could become very difficult,” emphasizes the economist. For example, Deco Proteste has a comparator in which it identifies the stocks of the companies where the purchase is recommended.

Prices are rising and high demand. Is it a good time to invest in real estate?

If mortgage rates rise, it is certain that house prices will continue to follow the same trend. In large urban centers there is more demand than supply. Therefore, it may seem interesting at this stage to invest money in real estate for those who have money aside – even to avoid making the context worse. But if real estate is often seen as a safe investment, it’s time to deconstruct this idea. “It’s a myth that real estate looks like a safe investment. Prices vary enormously,” emphasizes João Sousa. Investing in real estate, experts emphasize, should be done on a case-by-case basis. You should be aware that, with the prospect of a recession and the expected slowdown in the market, the context can have an impact on the value of the home you buy. The house actually runs the risk of losing its value if you have to get rid of it. Therefore, here is an advice from Filipe Garcia, president of IMF – Informação de Mercados Financeiros, which applies to investments in the most diverse purchases: “Too much attention is paid to the moment of purchase, but little is said about the moment of sale” . To make the right decisions, you have to think about it.

Savings certificates are more attractive. But why?

They are one of the most unanimous investments at this stage. Firstly, because they are indexed to Euribor, you can anticipate that the return on your investment will continue to rise for the foreseeable future. Second, because with state guarantees there are no risks. And they have a return that could reach 3.5% next year, a value much higher than deposits with banks, where the return is practically nil.

Luxury is timeless. But does it make sense to invest?

In times of crisis, there are people who see bags, watches or art as a good investment. But will he allow an interesting return, should the need arise? “These goods have several additional difficulties. The first is that there is generally no organized market to trade them in,” emphasizes Filipe Garcia. That is, the good will be worth what the buyer is willing to pay. It will ultimately depend on your perception of price. Then you have to keep in mind that in order to sell at a higher price than you bought, you may have to wait years. Luxury is also made of time – and of the growing rarity it creates. “It is a market that requires very specific knowledge. It is more dedicated to specialists”, summarizes João Sousa.

Gold is a safe haven. Is it a good option?

Gold is considered a safe haven and, in a context of market instability, is generally in high demand. And then appreciate the prices. That’s why one of the biggest investors in the world, Warren Buffett, has already come to advise against investing in this precious metal. So where are we? It’s always a matter of perspective. “Gold in dollars is down 7.5% this year, in euros it is up 8%,” Filipe Garcia puts in context. But if this can be profitable well, then know that together it yields nothing. Deco Proteste advises you not to invest more than 5% of your investments in gold. And if you want to do it, don’t do it in physical form, for example going to goldsmiths to buy gold, because “there is a difference between the selling and buying price. The best means of investing in another, says João Sousa, is through an ETF, ie a fund dedicated to this area.

There is an energy crisis there. Is it time to win with green energy?

It is in the field of entrepreneurship that we are beginning to see, even in an unstable context, which are the best companies to invest in. At this stage, says Diogo Teixeira, co-founder of Beta-i, renewable energy is one of the areas with the greatest potential. Especially since, with the problems registered in the supply of gas and fuel, at the expense of the war in Ukraine, the designs of the energy transition and decarbonization are becoming more and more urgent. “They will be more resilient companies, they will be a good opportunity for investors,” he sums up. So if you want to open a business or just invest, this could be the right choice. Development of batteries, fast charging methods, development of raw materials (such as textiles) with a lower carbon footprint are some examples.

Food is more expensive. Is investing in agriculture a way?

Food supplies have been disrupted by the war in Ukraine and prices have risen due to inflation, leaving many families struggling to meet budgets. So, would it make sense to bet on your own farming projects? Diogo Teixeira believes so, because of the impact of decarbonization through more local consumption and the greater perspective of price control. “It is certainly an area of ​​strategic, medium-term investment,” warns the spokesperson for the collaborative innovation consultancy. But again, you need to be aware of the context: Next year, families may need to save even more on food. If the investment perspective is short-term, it is therefore best to come up with another alternative, he says.

There isn’t that much money to manage. And if something breaks, could there be business?

Budgets are getting tighter. And if an appliance breaks at home, it may not be such an easy decision to replace it with a new one. In crisis situations, one of the businesses that can thrive is right: the repair of goods, as well as plumbing or electrician services, which allow more economical solutions than replacement or more in-depth work. “There is a huge shortage in the market of these types of professionals,” Diogo Teixeira admits, recalling that “it is no coincidence that some of the major companies in the country have launched ‘marketplace’ platforms [com anúncios] of this kind of service”. This can be an alternative for those looking for a professional future. Even because technology eventually removes some of the annoyances of the past, such as having to go door-to-door to attract customers. For those who have the skills not for the schemes, but for investments, digital platforms can be a market to explore. “The Portuguese should increasingly look for companies that are digital or scalable, more than just those that are subject to crises and the law of supply and demand. Because they work for the whole world, they are more resilient,” summarizes the co-founder of Beta-i.