The global market uncertainty brought forth confusion even among investors who have been working on their finances for years. Many investors who would have never opted for saving in the past, currently doubt whether this is a better option to go.
Wondering whether you should avoid the risk by sticking to saving or take the risk to ensure high ROI?
Follow the factors below to achieve the right balance.
Inflation never works in favor of saving
Saving is a safer route as the money you have will never decrease in times of market volatility. The major drawback here is that money will grow slowly, plus it is not the best option when there is inflation. Sometimes it even happens that the inflation rate is higher than the interest rate on the saving account.
We always recommend our partners interested in saving that they make sure that the expected inflation rates are not high. Nevertheless, this is not to say that unexpected economic events won’t happen.
The time horizon is an important factor to consider
If you are not sure whether saving or investing is the right way to go, you should consider your goals and the time horizon. If your goals assume short or medium terms, saving may be the right choice for you. For long-term goals, you should proceed with investing. Smart investments with long-term horizons usually yield positive results. Besides, you cannot forecast the inflation rates for the upcoming years.
The effect of market volatility isn’t usually predictable when it comes to investments
Market volatility can work in investors’ favor or against them. While some investors record-high return on investment in times of economic crisis, other investors face huge losses. You should do a market analysis in order to forecast the market trends, yet you can never be 100% certain about the success of the investment project.
Market clashes affect the savings accounts in terms of inflation only. Still, the latter can be a major drawback depending on its rate.
The level of risk tolerance matters
Are you able to endure the potential of losing money on an investment? If you can afford negative variability in investment returns, you should go for investing. If a negative outcome is unacceptable to you, then saving is the only available option for you.
The choice of specific investment projects also depends on the level of risk tolerance.
What do we recommend?
At Kingsmen Investments, we recommend that businessmen go for investing but they should look for safe investment projects and they should diversify their investment portfolios. We suggest investing in emerging markets as diversification is more attainable in such markets.
In case you have short-term financial goals, a savings account may still be the right approach for you.
Looking for a trusted investment partner? At Kingsmen Investments, we are ready to address all your questions and guide you through your investment journey in Armenia. Check out our investment opportunities here or give us a call at (+374) 95 110 301. High return on investment guaranteed!