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INVESDOR INSIGHTS | 8.3.2023
At first glance, it is enormously difficult for investors to achieve significant returns this year. High inflation is one of the biggest challenges. But if you take a closer look, you will see good opportunities. On Invesdor, several opportunities open up at once.
Without a doubt, 2022 will go down in history as a year in which humanity has faced more diverse crises than in a long time. After the pandemic-related supply chain issue, which had already boosted the prices to rise significantly, the shortage of goods produced in Ukraine, for example, has further exacerbated price inflation. The result: inflation at a historically high level. Inflation rate in European Union was 10.40 percent in December of 2022. Although inflation in the Eurozone may have passed its peak by now, the European Central Bank (ECB) itself still expects an inflation rate of around 6 percent for the year as a whole.
For investors in search of returns, this means, among other things, that the days of comfortable investing are over for the time being. Thus, high inflation does not only mean that daily life is becoming more expensive - it also implies that it is more demanding to make money work for you. Parking one's savings in fixed-term or overnight deposit accounts, as used to be both comfortable and profitable before the era of low interest rates, is not advisable even after the recent slight increases in fixed-term and overnight deposit offers from banks and brokers.
After all, a supposedly high return quickly shrinks when inflation is deducted; the real return is then considerably lower. The fact that the much-cited turnaround in interest rates by the central banks - such as the ECB or the US Fed - is only a limited cause for joy for investors is made clear by a simple but realistic calculation: if you receive two percent interest on the deposits in your account or custody account, with inflation at six percent, the bottom line is a return of minus four percent, i.e. you suffer a considerable loss of purchasing power in real terms.
Particularly in the current turbulent market environment, crowdfunding offers opportunities to invest in attractive, unlisted, companies. In the wake of the turbulence on the capital market and the associated inflation, the availability of venture capital has declined noticeably in recent months. In the course of this decline in demand, valuations for company investments have in turn been corrected downwards significantly - with the result that their entry prices are now quite attractive. This offers investors the ideal opportunity to get in on promising companies. In other words: Those aiming for long-term investment success can now seize attractive return opportunities at low price levels, i.e. at particularly favourable prices.
Market sectors such as energy and health in particular offer interesting investment opportunities. For example, comprehensive trend reversals are currently emerging in the health and energy sectors. Through the pandemic, health-related topics are experiencing a boom. This has been shown not least by the great interest in the market for vaccines and in the corresponding manufacturers.
Against the backdrop of the war in Ukraine and the associated sanctions against Russia, the question of a secure energy supply is becoming increasingly acute. As a result, suppliers from this supposedly conservative industry are suddenly in the focus of the media and the capital market. Many start-up companies in these sectors are offered corresponding growth opportunities. And thus also for the portfolios of those who invest here.
Those who become financially involved in these areas achieve two things. On the one hand, it is possible to increase one’s chances of a worthy return: one can profit from fixed interest rates, for example, as is possible in the field of renewable energies, or from the performance of growth companies. This allows one to participate in exciting and promising trends at a very early stage, for example in:
On the other hand, investing in the health or energy sector can be considered impact investing. This means that investments not only have the purpose of increasing capital, but also have a social and/or ecological component. Impact investors thus make an important contribution to tackling the greatest challenges of our time. The fact that political decisions based on citizen participation are sometimes taken into account in these fields should also be interesting for all those investors who also attach great importance to basic democratic principles in their investments.
Those who also prefer companies from Europe in such investments can expect another positive effect: they strengthen the European economy. After all, the past three years have shown one thing: The dependence on global supply chains is an economic weakness of our continent. Yet it could be quite different: The economic area of Europe offers many opportunities to use regional supply chains and strengthen local economies - and thus a great opportunity to reduce dependencies and uncertainty factors.
Through Invesdor.com you have the opportunity to utilize the rising trends and take advantage of the associated opportunities. Invest like venture capitalists who invest in promising companies in the early stages of a business cycle. Benefit from the continuous earning power of traditional medium-sized companies. In short: Benefit from the broad spectrum of opportunities on Invesdor - for high diversification and optimal risk spreading. In addition, you combine financial commitment with an overriding goal: shaping the future. And you strengthen the European economy.
Speaking of Europe: With the ECSP licence, which Invesdor received in January as the first provider from the DACH region (Germany, Austria and Switzerland) and as one of the first in Europe, we fulfil all regulatory requirements of the new European Crowdfunding Service Provider Regulation (ECSP for short).
The advantage is evident in debt financing, among other things. In the German speaking Europe, the brokerage of such financing via online platforms was almost exclusively possible with qualified subordinated financial instruments before the regulation. Thanks to the ECSP licence, we can now also offer non-subordinated debt capital solutions tailored to the respective financing – investors are thus placed on an equal footing with other debtors in the event of insolvency.
The information contained herein is not meant to be, and it shall not be interpreted as investment advice or a recommendation and investors must neither accept any offer for, nor acquire, any securities unless they do so on the basis of the information contained in the applicable investment material of a target company. Investing in securities of unlisted companies is associated with high risk.