How to Invest in Uncertain Times

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INVEST: Uncertainty is the inability to forecast future events. This leads investors to sell off their investments in assets that they consider risky.

We live in uncertain times and markets around the world have become erratic as a result of actions and utterances of certain leaders across the globe. Here in Kenya, we have not been spared. Over the last couple of weeks, foreigners have been pulling out their investments locally, and internationally creating a sharp decline in the global markets. This is just a general picture of the underlying situation of what is really taking place.

As time passes, the markets around the world are increasingly become unusually uncertain, pointing to a looming recession. There is another school of thought in personal finance that moves away from the deterministic projection of your life, savings and investments. Afterall, life isn’t consistent and liner – doesn’t fall well on a graph. In it, we seek to invest more in ourselves and save for sure investment opportunities that will set us up for life. 

So, here is how you can invest and take advantage of opportunities in uncertain times: 

#1 Uncertainty Fund

Its always a great plan to plan for the worst and, patience during such times always pays off as great opportunities always come up. Setting up a fund to invest when prices are low is a very smart move to make. This way, you are sure to be catering for every opportunity that may come your way. 

Remember that markets are always rising and falling. Dooms day/ recession scenerios will always come, and tend to recover within about five years. So, if you practice patience, plan well and invest for the long term – who cares. You can ride through the waves and emerge victorious. 

#2 Buy When Low, Sell When High

The best defence in uncertain times is a well informed financial decision that is based on logic not fear. Usually, a good market isn’t one that does well; a good market is an expensive market. Thus, a bad market isn’t one that does badly; a bad market is simply a cheaper market. Uncertain times means that the market is generally very fearful and everyone is looking to pull out their money from various investments. This causes market prices of various assets to fall (and become cheap). Regardless of where your interest or strategy lies, you can’t go wrong investing over a longer period of time. Therefore, take well-informed decisions that will take advantage of the prices when things reverse back.

Never try to play the market because you have all these pros against you, equiped with legions of data and robo-advisors to help them make excellent decisions. 

Real estate is a great opportunity during uncertain times as it has been known to be the least risky. 

#3 Avoid the Market Noise

The aim of investing in uncertain times is finding value hidden within all the noise. The fall of the market can create excellent opportunities. Just avoid the sensational remarks and the politics that go with it all. If you look back historically, you’ll see that with every political turmoil, we have recovered and reached new highs too. So, don’t let the detractors and naysayers instil fear in your heart, instead stick to the basics. Find value in what you invest in, and invest for the long term. Remember that people tend to react emotionally to missed opportunities because of fear which leads them to sell and sell, while the market is already dropping. This means they probably don’t have much faith in their investments as their aim is to invest for the short-tem. As for long-termers, they will ultimately miss the recovery.  If you have made a smart well-informed financial decision, trust your instincts.

Make The Move, Stay the Course  

Afterall, as the common saying goes, there is nothing new under the sun. Markets rise and fall all the time, the idea here is to prepare for the right moment, the right opportunity, make the move and stay the course. For everything that falls must surely rise and everything that rises must surely fall – despite it, don’t let the short-term rises and falls scare you. The overall growth of assets is still on the rise globally. 

Happy Investing!


Image credits: Top by Rawpixel via Pexels

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Irene Makanga
Irene has an MBA in Finance and is an avid businesswoman, passionate about financial literacy.

3 COMMENTS

  1. This was an awesome post! For #2, what is the process that you use to identify when something is being sold at a discount? I think in many cases the layman has no idea when they are buying high.

    • Being connected and attuned to the market is necessary to grasping information on great deals when they come up. Where your interests lie i.e. land, stocks, art etc., the information is out there, within your network…that’s where great opportunities arise. Don’t engage a market for assets that you don’t understand or have a hold of how it behaves during its different seasons.

  2. I think that knowing what you invest in is of paramount importance (just as you have stated)! Thanks for this post, it has given me a little to ponder on my end. This relates directly to understanding the intrinsic value of the investment, and how can you do that without understanding the underlying asset! Please keep these coming!

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