Today market requires flexibility in investment strategies and a very careful attitude to your portfolio.
Aleksey Potapov, Managing Director of the Investment Department, explains:
“A reasonable balance in the allocation of your investment portfolio and a tailor-made strategy help to achieve planned returns with an acceptable level of risk. Only you, together with an advisor, can decide what risks are suitable for you, for how long to calculate investments and when you will need funds for new projects“.
It makes sense to distribute investments between high-risk assets that can bring multiple returns, traditional investments with a strong outlook, alternative investments, and less liquid ones such as real estate. Real estate can exceed a third of the total volume of the investment portfolio.
According to the annual global research The Wealth Report of the consulting company Knight Frank, in 2020 the total volume of world investments in commercial real estate amounted to $720 billion, of which private investors accounted for $232 billion. Commercial real estate allows you to receive regular income from rent payments. In addition, banks are ready to finance up to 70% of the object’s cost - thus, by investing in real estate, you do not take money out of the business and get the maximum return on investment.
Investing in overseas property, for example in Europe, helps to avoid unpredictable currency surges and macroeconomic shocks. For many this is a real asset that works against inflation. In the future, after the governments stimulate national economies in 2020, they expected inflation to increase, so investor interest in this segment will continue to grow.
It is also worth paying attention to alternative investments, which are often viewed as optimizing the portfolio and increase the return on investment. Their key characteristic is illiquidity. These include commodity contracts, precious metals, real estate, intellectual property, cryptocurrencies, non-fungible tokens (NFT), art, antiques, expensive alcohol, bad debt, hedge funds and more. These assets are more suitable for investors with a long-term investment strategy, although short-term speculation is possible on them.
“Alternative investments are often complex and require more scrutiny - looking at the past performance of similar asset classes, the track record of sponsors or fund managers in which such assets accumulated. Depending on it purchased how and where alternative investments, commissions may be higher than with acquiring traditional assets”, notes Aleksey Potapov.
More details in the material Tatler