What should optimists invest in? “A historical opportunity for profits” [ANALIZA]
— Gold or other precious metals are of course also an option, but it is more about transferring the value of money over time. In a word – if we want the appropriate amount to be worth more or less the same in a few years as it is today, gold seems to be a good idea – says Eryk Szmyd from XTB in an interview with Business Insider Polska.
So what do experts advise the middle class who want to invest – and are less afraid of risk?
Important: the calculations included in the text are for information purposes only and do not constitute a recommendation or any other form of suggestion for the purchase or sale of financial products. Investment decisions should be preceded by your own analysis of risk and financial situation.
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— We live in times when the global economy is growing incredibly fast, but money, one might say, is corrupting. Therefore, it loses value over time. Therefore, I would suggest potential investors to raise the risk threshold – because we simply live in times of growth, This may even be a historic opportunity for profits – says Eryk Szmyd from XTB.
So what is worth investing in? — In my opinion, all investment paths lead primarily to ETFs and the stock market. Stock exchanges are certainly an interesting direction – Polish, American or stock exchanges in emerging countries – indicates an analyst from XTB.
Michał Żuławiński from the Association of Individual Investors speaks in a similar tone. — Poles are investing not only on the WSE, but also on foreign stock exchanges, access to which has been both simple and cheap for several years. Owning shares of the largest US corporations was beyond the imagination of our parents or grandparents. Today it's a matter of a few clicks – says the expert.
Stefan Vegh, general director of the Central and Eastern Europe region of Saxo Bank, recently said in an interview with Business Insider Polska that Poles are particularly eager to invest in shares – and the most frequently chosen stock exchanges on the platform are not Polish, but American ones. Interest in Asian stock exchanges is also growing rapidly.
The answer to the question which stock exchanges – American, European or Asian – will be a better choice for “risk takers” is not simple. Experts emphasize that American stock exchanges have been growing strongly in recent decades (although, of course, there have been crises), taking into account, above all, the very dynamic development of modern technologies. Recently, the stock has been rising on the wave of the AI boom.
It can be assumed that the United States will maintain its primacy in the IT world – with this assumption, you can bet on the action of US companies. But recently, Asia has begun to dominate in many areas – for example, the use of AI in electronics, automotive, and more broadly – transport.
Experts admit that the real “risk takers” invest primarily in shares of companies that are not yet well-known – and do not yet operate very widely.. For example, Tesla shares cost even less than $2 a dozen years ago. Now they can cost $450. — It's all about winning the bet with reality. Today, the popularity of electric cars is obvious, but it was different around 2010. The key is to predict what will grow, says one of our interlocutors.
Currently – according to experts – companies dealing with AI, cybersecurity or biotechnology have the greatest chance of becoming the “new Tesla” in the long run. But “risk takers” may also consider companies developing robotic projects or integrating AI with robots. It seems that autonomous cars and even “flying” cars also have prospects. Such vehicles are, for example, being developed in Shenzhen, China, and seem to have quite a promising future.
“The stock market is for optimists”
But Eryk Szmyd from XTB advises not to write off Poland.
— Poland has changed beyond recognition in the last dozen or so years. So someone who invested in shares of construction companies a dozen or so years ago – and did not sell them – can be very satisfied today. After all, construction companies grew on the construction of roads and apartments. Today, Poland is probably facing a great railway revolution. So perhaps it will be similar to shares of construction companies, as it will be with shares of railway companies. There are plenty of similar trends, says the expert in an interview with Business Insider Polska.
— However, I repeat that the stock market is for optimists. If we do not believe that the world will develop, it is better to give up on the stock market. I believe that it is not worth investing against your will. However, we can see that the world economy has been developing significantly for years – regardless of temporary crises. So I think it's worth taking advantage of the opportunity, Eryk Szmyd tells us.
As he says, investing in shares also requires a slightly different mental attitude than, for example, investing in precious metals. — Of course, it's hard to give universal advice. However, I would suggest looking at investing in the long term – and being prepared for moments when the market will fall. After all, the market may have losses of up to 50 percent, but this does not mean that such investments will not bring profits in the long run, says the expert.
— On the contrary, they will bring profits if we simply mentally endure these moments of market collapse. Therefore, I advise investors to simply have the right attitude towards investing. Gold or other precious metals are of course also an option, but it is more about transferring the value of money over time. In a word – if we want the appropriate amount to be worth more or less the same in a few years as it is today, gold seems to be a good idea. But it is not an investment comparable to the stock market, he adds.
What about cryptocurrencies and real estate?
The experts we talked to advise middle-class risk-takers to invest primarily in shares, ETFs and investment funds. This may be surprising, because cryptocurrencies, for example, are considered risky, yet potentially very profitable investments. However, investment specialists approach Bitcoin and the company extremely carefully.
It is difficult to say what actually shapes the price of cryptocurrencies. And while investing in “crypto” in the short term has its supporters among experts, most of them throw up their hands when asked what the price of bitcoin or ethereum may be in a decade or two. It may, of course, be much higher than currently – but it is also quite possible that more interesting investment “news” will appear and the world will forget about cryptocurrencies.
— What will happen to cryptocurrencies in 20 years? The honest answer is that I have no idea. That's why I don't invest in them myself with such a horizon and I don't advise others to do so either — one of the experts told us anonymously.
Not everyone is an enthusiast of real estate investments. Many “risk-takers” who bought premises in Polish cities in recent decades have found out that such investments sometimes hit the bull's-eye. After all, prices in Warsaw and Gdańsk have skyrocketed since the 1990s – and this translated into many fortunes. However, many experts believe that the “golden times” of investing in “concrete” are simply over. Prices are not rising so quickly, it is difficult to find great deals in large cities, and Poland has a poor demographic situation. In a few or a dozen years it may turn out that there are simply too many apartments in the country. Of course, this is compounded by geopolitical risks.
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— When choosing between investing in real estate and investing in shares (also using ETFs – ed.), you should remember a few basic differences. First of all, liquidity – shares can be bought and sold in seconds, and in the case of real estate, the process can take up to weeks. The difference also concerns transaction costs and maintenance costs, which are higher in the case of real estate. On the other hand, even if we have a diversified portfolio of shares, we may be exposed not only to greater price volatility in the short term, but also to the very fact of the existence of real-time valuation in the form of stock quotes available from a smartphone. Meanwhile, many people do not know how much they could sell their property for and, paradoxically, it gives them peace of mind, not always justifiably, said Michał Żuławiński from SII in Business Insider Polska.
Although – as usual in investing – it is possible that the best idea may be not to listen to the experts and bet on an opportunity that few people currently see. However, this is a solution for the truly advanced – not only those who have a high tendency to take risks, but also those who have knowledge and intuition. And they are prepared for the fact that the latter may disappoint them.
Author: Mateusz Madejski, journalist of Business Insider Polska
