In such a sensitive time for the global economy, protecting your savings is complicated. The new twenty years began with an unpredictable health emergency. If Coronavirus is not enough to make the idea of a critical situation, the war on oil prices is doing the rest. To manage their savings, therefore, new approaches are needed from investors.
To say it is Paolo Paschetta, country head Italy of Pictet Asset Management, interviewed by the editorial staff of Forbes on the subject. According to Paschetta, 2020 is a turning point in which it is necessary to offer investors new strategies to focus on the future economic scenario. In fact, the greatest risk of the period is the increase in contagion in the United States: with the advance of the health emergency there is an inevitable slowdown in global economic growth, which is mainly linked to the US market. As if that were not enough, European countries, despite attempts, are in difficulty in finding common lines of action.
For this reason, investors should adopt a long-term approach, on average of 5/7 years, so as to free themselves from the trend of the economic cycle, avoid the volatility and emotions linked to current choices, and overcome the limits of an approach of geographic type.
But how do you do it? Paolo Paschetta proposes two essential tools to increase the solidity of investments. First of all there are the PACs, capital accumulation plans, valid both for small portfolios and for large capitals, capable of making the approach to investments more rigorous and reducing the impact caused by the psychological bias. The PACs, in fact, allow you to make gradual investments, so as to remove one of the elements most subject to distortions: the timing, that is the moment in which you decide to invest.
The second tool proposed by the country head of Pictet Asset are the megatrends. These are trends capable of structurally modifying the economy, innovation management and all life on our planet, giving companies new possibilities. For example, explains Paschetta, megatrends work on sustainability, which is able to reduce risk and increase performance. Not surprisingly, according to the Harvard Business School, sustainable investments have made 35% more than average over the past 25 years.
In the next few years the market will change radically, giving rise to an unprecedented panorama. Whatever your business is, being prepared is vital. Not surprisingly, adds Paolo Paschetta
The bond universe may hold few satisfactions for investors, while equity valuations would have room to expand, offering extra earnings.
Source: forbes.it