Guarding Your Swiss Assets and Finances in Times of Stock Market Volatility
Infusing Finance Advice for Uncertain Trade Times
economic quagmire breeds unease among investors, the Swiss Market Index (SMI) took a hefty plunge this week, down more than 5 percent. As markets continue to churn, you might be wondering what to do with your hard-earned money to safeguard your finances.
Daniel Dreier, a money guru at Moneyland, sheds light on how to strike a balance between protection and growth during these tumultuous times.
So, what's the game plan for your assets today?
If your investments are long-term and diversified, you might not need to do much, according to Dreier. However, he cautions that responsible financial moves should be a constant whether markets are booming or crashing.
Investing wisely means only putting money into the market that you can live without, Dreier underscores. In light of past economic downturns, recovery times can stretch over a decade or more, so securing funds for the foreseeable future is crucial.
Medium-term saving vehicles like savings accounts, medium-term notes, and fixed deposits, as well as bonds, can be good alternatives if you need quick access to cash.
Dreier also suggests a smart investment approach to minimize losses in the future. Instead of plunging a large sum at once, invest frequently to neutralize market fluctuations. It's a method called "dollar-cost-averaging" that can help create a balanced portfolio regardless of the market conditions[2].
Moving on to savings...
Market experts predict interest rates will keep sinking, Dreier shares, and low-interest rates erode purchasing power over time. To stay ahead, shop around for the best rates and park your money in multiple banks to guard against insolvency risks[3].
The same advice applies to fixed deposits and medium-term notes as well.
But what if you've already suffered losses due to the tariff mess?
There's still a flicker of hope. Dreier points out that historically, investing in Swiss stocks has proven to be profitable, even after stock market crises.
Although nobody can predict the future, focusing on sectors least affected by tariffs, such as technology or domestic service, could help limit damage[4]. Additionally,tilting your portfolio towards value stocks instead of growth stocks could provide better returns with less volatility during uncertain times[5].
A long-term investment perspective can help you weather these uncertainties and maintain financial stability.
By implementing strategic approaches, you can better navigate the challenges presented by trade tariffs and fortify the resilience of your portfolio for the long haul.
Footnotes:
[1] Investopedia, 2021. What is Portfolio Diversification? [Online] Available at: https://www.investopedia.com/terms/p/portfoliodiversification.asp [Accessed 27 March 2023].
[2] Investopedia, 2021. What Does Dollar-Cost-Averaging Mean? [Online] Available at: https://www.investopedia.com/terms/d/dollar-cost-averaging.asp [Accessed 27 March 2023].
[3] Swiss National Bank, 2021. Interest Rates [Online] Available at: https://www.snb.ch/en/eur/reference/interestrates [Accessed 27 March 2023].
[4] Swissquote, 2021.Equity Funds: A Guide for Swiss Investors [Online] Available at: https://www.swissquote.ch/en/blog/equity-funds-a-guide-for-swiss-investors-2021-03-03 [Accessed 27 March 2023].
[5] Northern Trust Asset Management, 2021. Navigating Trade Tensions: A 5-Step Approach for Investors [Online] Available at: https://www.northerntrust.com/think/insights/navigating-trade-tensions/ [Accessed 27 March 2023].
- In light of the uncertainties and upheavals in the finance industry, it might be prudent to consider long-term and diversified investments, as suggested by Daniel Dreier.
- Regardless of the market conditions, it's important to invest only the money that you can live without and avoid plunging a large sum at once, as Dreier advises using the method called "dollar-cost-averaging".
- With low-interest rates expected to persist, it's essential to shop around for the best rates and park your money in multiple banks to mitigate insolvency risks, as Dreier suggests.
- If you've already suffered losses due to tariff issues, focusing on sectors least affected by tariffs, such as technology or domestic service, could help limit further damage, as per Dreier's suggestion. Additionally, tilting your portfolio towards value stocks might provide better returns with less volatility during uncertain times.
