It's been nearly 80 years since World War II, and the world has since enjoyed relative peace on the global front. The Russian invasion of Ukraine has ended that peace quite evidently. A massive economic and humanitarian crisis is underway, and the impact is being felt worldwide.
So far, 1.5 million civilians have fled Ukraine for neighboring countries like Poland and Romania, and those numbers are expected to climb given the danger facing Ukraine's 44 million residents. In response to the invasion, nations worldwide have imposed severe economic sanctions on Russia in hopes that economic pressure will end the conflict.
While it was an important step to prevent the loss of lives, economic sanctions don't just impact the target country. There are global consequences for the world that have worked to reduce barriers and promote international trade for decades. Among other repercussions, there has been volatility in the stock market, and the Moscow Exchange was closed to prevent complete collapse.
As tensions continue in Ukraine, global financial markets also continue to be under pressure. So, it's important to take care of your investments and assets if you haven't already. It's time to start looking for assets to buy during the war to protect your finances before it's too late.
As the name implies, defence stocks provide supplies for war, such as weapons, tanks, fighter jets, and more. With this in mind, many 'defence stocks' are considered good defensive stocks with significant cash flow and generous dividends.
The biggest news across commodity markets right now is oil prices. Since Russia plays a significant role in the world's oil supply (especially in the E.U.), prices are skyrocketing. Oil marketing companies and refiners would be a good bet in these times.
One safe haven that does well in times of war is gold. Recent academic research has found that the yellow metal is a good hedge against geopolitical upheaval. After being deemed a "pet rock" for the past several years, gold is holding its own during a time of crisis.
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Even though you may not think it to be true, cash is still a position. When in doubt, having a solid cash position can give you peace of mind during times of war. 'Liquid fund is king,' and cash is the best form of liquid fund. Although holding cash will not give you the explosive returns like growth stocks have in the past, it also won't blow up your account.
If you are looking for stocks to buy during the war, you should know a few things. For one thing, now more than ever, it's critical to start practising risk management.
History has shown us that stocks to buy during a war can include defence, commodities (gold), and energy. Furthermore, a strong cash position and exposure to select bonds can offer further protection.
Diversification can be a great way to start. Rather than having all your eggs in one basket, like only tech stocks or only real estate, diversify your investment across sectors. Gold is definitely a great choice as it has less risk. Nobody knows how long this could last and what will happen next. It's best to prepare your portfolio for the worst.
There is seldom any correlation between businesses and gold. Uncertain times do not necessarily affect gold supply and demand thereby cementing the yellow metals position as a hedge against geopolitical risk.
There can be instances when one might have an opportunity to buy assets that were otherwise overvalued. It would only be possible to buy these assets if one had a sizeable portion of their portfolio in cash.
Unexpected volatility is an expected part of investing.
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