By Judith Gicobi
The continuing Russian invasion of Ukraine has had a global economic impact.
The expense of living is increasing at an alarming rate. You may be asking how else you can safeguard your cash and investments from financial deterioration in the midst of all of this.
Making financial decisions based on an emotional reaction to important events, according to investment guru Don Bennyhoff, almost always results in long-term losses.
“Making a radical change in the midst of all this uncertainty is usually a decision that you will regret,” he says.
When markets are slowing, your degree of risk endurance should be the unifying factor that guides your financial decisions.
Bennyhoff, for example, notes that if you hold money in a bank account, the interest you earn may be negated by inflation.
You shouldn’t have to put your money in a bank that is outpaced by inflation when there are better solutions available.
Gold and the US Dollar
During times of excessive volatility, investors seek to mitigate the risk by trading in commodities like foreign currencies such as the US dollar, and gold according to Robert Ochieng, an investment specialist and the founder of Abojani Investments.
If you have a large sum of money and are searching for a safe haven, he suggests investing in USD fixed deposits and USD-based money market products. Some of the local insurance and financial companies that offer USD money market funds are Brtiam, Nabo Capital, CIC, and NCBA.
“It is good to have a target of holding investments of $1000 and above in US dollars over time. This is the equivalent of Sh114, 000 and above,” says Ochieng. “There are also exchange-traded funds for commodities that investors can use to gain exposure in commodities such as wheat, corn, oil, and natural gas.”
Gold is an alternative, although it is now trading at its highest levels in over a year. This has been worsened by the market’s instability as a result of Russia’s invasion of Ukraine.
Offshore
If you’re seeking a safe harbor for your money, Ochieng suggests looking into offshore exchange-traded funds. The Invesco DB Oil fund and the Invesco DB Agriculture fund are two examples. “They could also look at individual stocks such as Mosaic Co which is listed on the New York Stock Exchange. This is the largest US producer of potash and phosphate fertiliser and Vale SA which is the largest producer of Iron Co and Nickel in the world,” he says
Liquidity
When confronted with adverse circumstances such as the economic downturn caused by Russia’s invasion of Ukraine, constantly prioritize liquidity. This implies you will have enough liquid assets to cover your most pressing need.
