As the uncertainty of the Iran war looms, investors are looking for safe havens for their money. Amid the uncertain duration and outcome of the war, investors are also worried about oil prices and supply chain disruptions.
Recalling a similar disaster during the COVID-19 pandemic in the not-too-distant past, assets known as the “flight to safety” have soared again, driving money away from riskier investments such as stocks.
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Here are five safe places you can put your money during the war, according to experts.
When it comes to safe haven assets, gold is often at the top of the list. The reason is that gold has intrinsic value. It does not rely on any government, currency or economic output to make it clear.
Gold is “an effective portfolio diversifier that can help hedge against a range of market and economic risks,” analysts at UBS wrote in a recent investment outlook, noting that demand for the metal grows when global tensions rise.
Bridgewater Associates founder Ray DeLeo also encouraged investors to hold gold as a portfolio stabilizer. “If you don’t have gold, you don’t know history or economics,” he said.
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U.S. Treasury securities often attract investors’ funds during geopolitical unrest because they are backed by the full faith and credit of the U.S. government. According to the Securities and Exchange Commission, they are generally considered the safest investment in the world.
This popularity makes government bonds a frequent target for investors seeking stability during geopolitical shocks.
Many investors sell their stocks and bonds during a war and simply keep cash. Much of that money goes into FDIC-insured high-yield savings or money market accounts. This allows the funds to continue to earn interest, although usually at a moderate rate, while offering stability and immediate access.
The US itself is still seen as a safe haven during turbulent times, and this also attracts investors to its currency.
As reported by Barron’s, David Morrison, senior market analyst at Business Nation, recently wrote, “The US dollar remains a safe haven for investors.”
Some stocks are considered more defensive than others, and they typically attract investor dollars during uncertain times. You still have to pay your electric bill, commute to work and no matter what happens in the economy, companies that provide these goods and services are better protected than other discretionary businesses.
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