Previously, Open Journal considered the macroeconomic aspects of the current situation. Today we will analyze the basic principles that will help the investor not only save, but also increase his capital.
1. Abstract away news and unnecessary disputes
The constant consumption of political news, especially if accompanied by debates on social networks, does not contribute to the rational thinking necessary for high-quality financial transactions. Anxiety, dominance of emotions, waste of nerves and time – this is an incomplete list of the negative consequences of such behavior. Therefore, in 2022 it seems reasonable:
- do not get involved in political disputes;
- limit the consumption of political news.
This can help, for example, special programs and extensions for browsers like StayFocusd, which limit the time spent on the Internet.
2. Explore new niches
Cutting off from Western (and not only) business, of course, contributes to the fall of Russia’s GDP, the deterioration of the quality of life and the growth of inflation. According to the forecasts of the Central Bank, by the end of 2022:
- inflation will be 18-23%;
- GDP will decrease by 8-10%;
- exports and imports will decrease by 17–21% and 32.5–36.5%, respectively.
Nevertheless, 147 million people remain in the country; there are 3274 legal entities, 3705 individual entrepreneurs and 3862 self-employed ( at the beginning of 2022). At the same time, the volume of deposits of individuals and legal entities at the end of the first quarter of 2022 is 61.5 trillion rubles. Consequently, there are still many economic entities that have capital and need to be serviced. This means that you need to strive to occupy the niches vacated by Western business, and look for ways to make money in them.
3. Analyze sanctions and their consequences
The authorities of the Russian Federation are quite energetically responding to the sanctions imposed against our country and the challenges associated with them. These measures affect financial market participants both directly and indirectly – examples are currency restrictions or changes in the key rate. You can (and should) track the activity of the authorities on a special page of the Central Bank.
4. Learn technical analysis
Since the end of February, the amount of official economic information that was previously freely available on the Internet has decreased. For example:
- The Central Dispatch Department of the Fuel and Energy Complex stopped publishing data on oil production and export;
- The FCS has suspended the publication of statistics on imports and exports;
- The Central Bank suspended the publication of data on the repayment of external debt and foreign trade operations;
- credit institutions received permission to temporarily reduce the volume of reporting disclosure.
Also, many large public companies took the opportunity to close down inside information: they stopped conferences with investors, do not publish forecasts, financial statements and some other data on their websites.
Under these conditions, value -minded investors experience objective difficulties in obtaining high-quality information necessary for fundamental analysis. But the possibilities for the implementation of technical analysis have not gone away – after all, it is based on stock statistics, which continues to be in the public field.
5. Have a financial airbag
Any crisis is accompanied by an increase in uncertainty and a variety of risks. You can lose your job, face unexpected costs or breach of agreements, even with reliable partners. At the same time, the possibilities for obtaining borrowed funds are narrowing: rates are rising, and the percentage of approval of loans is decreasing. Therefore, it is vital to have some reserve of money – ideally for two to three months.
6. Analyze the credit burden
In the current conditions, it makes no sense to strive to repay old loans ahead of schedule, taken at the same cost. You should also think carefully about new loans that are offered at high rates. Such caution is due not only to the risks of obtaining funds needed to service the loan, but also to the actions of the Central Bank, which is reducing the key rate. At the beginning of April 2022, it was 20%, and by the end of the month it had decreased to 14%. For loans taken at a high rate, this means the risk of overpayment for months and years in advance.
7. Use online services
The advantage of the modern Internet is a large number of online services. With their help, you can compare deposit rates, lending options and other financial aspects. Since it is not clear when the crisis will end and how severe the crisis will be, it makes sense for even financially confident people to turn to these services to save money.
8. Be careful with currency savings
Previous crises (1998, 2008, 2014) were marked by the reliability of high-quality foreign currencies. Indeed, according to the Central Bank:
- at the beginning of 1998 the exchange rate of the ruble against the dollar was 5.96, and by the end of the period the ratio was 20.65 rubles;
- at the beginning of 2008, the dollar cost 24.4 rubles, and by the end of the year its value had risen to 29.4 rubles;
- at the beginning of 2014, the dollar was worth 32.7 rubles, and by December 31, 2014, the ruble had weakened to 56.3 rubles. per dollar
But today’s crisis is accompanied by significant restrictions on foreign exchange transactions. Therefore, it is not yet possible to freely sell and buy dollars and euros. In addition, the future prospects of these currencies as a reliable store of value are not clear. The Iranian option is not excluded, when several exchange rates coexist in the country at once: official, market and informal.
9. Learn cryptocurrencies
Cryptocurrencies have long been considered a junk asset, a bubble of interest only to individual enthusiasts. But they also have their advantages:
- weak regulation;
- very low transaction fees.
Given the sanctions, cryptocurrencies are becoming an interesting asset worthy of careful study. The Russian government is already preparing to recognize the legality of the circulation of cryptocurrencies, but has indicated that it will be regulated . At the same time, you need to remember about the disadvantages: high price volatility and the risk of loss, for example, during hacker attacks.
10. Study the economies of countries that have not joined the sanctions
At the beginning of May, China, India, Turkey, Iran, Arab countries, states of Latin America and Africa did not join the sanctions (in whole or in part). Objectively, they and their companies will in the foreseeable future play an intermediary role in Russia’s relations with the outside world. In such a situation, it is necessary to carefully study their trade laws, currencies, securities and other aspects that may be of interest to investors looking for an alternative to Western countries.
The current crisis is in its early stages. It is expected that due to the depletion of reserves and the rupture of foreign economic contracts that are still operating by inertia, it will enter the main stage from May this year. But along with the undoubted negative consequences, the crisis also brings opportunities that investors can realize with proper management of their resources.