What assets are worth investing in during a crisis?

The 2020 recession has left many investors stumped. High inflation makes it unprofitablesaving capital in fiat currency in bank accounts.

Even during a crisis, there are assets in which you can invest without any particular risks. Let's present some of these investment instruments:

1. ETF

ETF (Exchange Traded Funds)  – Thisa collection of tens or hundreds of assets in one fund. ET = “exchange traded", F = "fund". ETFs are traded on major stock exchanges such as the New York Stock Exchange and Nasdaq. Investing in multiple assets on a trusted exchange reduces the risk of capital loss.

The main advantage of ETFs over individualassets are risk mitigation: the ETF already contains a pre-selected and valued collection of assets. If one asset shows weak results, it is highly likely that the other, on the contrary, is growing, which helps to minimize the investor's losses.

On the other hand, when all investments are invested in one asset and it has dropped sharply in price, the investor's entire capital can be burned out in a short period.

In general, the profitability from participation in ETFs is estimated at 10-30% per annum

2. IPO

IPO – this is an initial public offeringshares of the company, which will then be sold on one of the major exchanges. An IPO is sometimes called a “going public.” The process itself represents the transfer of part of the company's shares to willing buyers, while the controlling stake remains with the owners. Companies conduct IPOs to obtain additional financing for large-scale expansion, pay off debt or develop infrastructure. 

The following indicators are used to assess the effectiveness of an IPO:

1. Market capitalization: An IPO is considered successful if the marketthe company's capitalization equals or exceeds the market capitalization of its industry competitors within 30 days of the initial public offering. Otherwise, the effectiveness of the IPO is in question.

Market capitalization = share price multiplied by the total number of outstanding shares of the company

2. Market pricing: The IPO is considered successful if the difference betweenthe offering price and the market capitalization of the issuing company 30 days after the IPO is less than 20%. Otherwise, the effectiveness of the IPO is in question. Income from owning shares can range from 40-150% per annum. 

3. Cryptocurrency

Despite the high volatility of the cryptocurrencymarket, digital assets have long been one of the popular hedging and investment methods. During the crisis, more and more custodian investors are considering bitcoin as “digital gold” or a store of value. Top digital assets can be profitable in the long run.

According to some reports, in the long term, investments in crypto assets can bring from 30-150% profit.

4. Staking

Staking means that part of the cryptoassetblocked in the account to verify transactions and support the network. In exchange for storing cryptocurrency and strengthening the network, the hodler receives a reward. With the help of staking, you can receive passive income in the form of additional coins, and earn extra when the coin increases in value. Not all cryptocurrencies support staking, and its yield is estimated at 10-30% per annum.

5. Investing in startups

There are many stories about beginnerscompanies that have made great strides and, in turn, have made their investors extremely wealthy. Investing in a company early in its life cycle can be very profitable. Such investments are available to both venture capitalists and average investors. Although affordable thanks to crowdfunding laws in many countries, such an investment carries a high risk and high reward.

The peculiarity of investing in startups is the lack of stock trading. You will have to keep your investments until the company goes public or is acquired.

Depending on the project, you can count on income in the region of 30-50% per annum.

Seedinvest – is a crowdfunding platform that allows individuals to invest in companies that have been pre-screened for potential viability at an early stage.

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