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INVESDOR INSIGHTS | 23.3.2023
At first glance, it is enormously complex 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.
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. The inflation rate in European Union was 10.40 per cent 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 per cent 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.
A supposedly high return quickly shrinks when inflation is deducted; the real return is then considerably lower. Let's make a simple yet realistic calculation: if you receive a profit of two per cent, with inflation at six per cent, the bottom line is a return of minus four per cent.
In the wake of the turbulence in the capital market and the associated inflation, the availability of venture capital has declined noticeably in recent months. Valuations of growth companies have been significantly revised downwards, resulting in a very attractive valuation level. 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.
1. Invest in promising industries
Market sectors such as energy and health in particular offer exciting 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 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.
2. You can use your investment to help solve the biggest challenges of our time
Those who become financially involved in the areas listed below 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 renewable energy projects 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.
3. Keep an eye on European growth companies
The past three years have shown one thing: The dependence on global supply chains is a significant economic weakness of our continent. This makes room for new innovations and offers enormous opportunities for fast and growth-oriented European companies.
Through Invesdor.com you have the opportunity to utilise 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.
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.