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How investors save finances in a crisis: approaches to diversification, selection of low-risk assets and cost optimization



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Investment protection, minimization of risks and possible losses is the main topic that has occupied investors around the world in recent weeks. In today's article, we will talk about what approaches to solving this problem can be used, and what important points should be taken into account.

Diversification is very important


Diversification is an approach in which an investor forms a portfolio containing a wide range of various financial instruments and assets of different classes. This allows you to reduce the unsystematic risk that arises when investing in a particular company - as opposed to the systematic risk that arises when investing in specific markets as a whole.

Key ideas for creating a well-diversified investment portfolio:

  • It is necessary to use assets of various types - stocks, currency, ETF, etc. At the same time, it is also possible to diversify within the framework of asset classes - for example, not to invest in shares of only companies from one industry.
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Read more about diversifying your investment portfolio in this article .

It is necessary to choose an investment strategy in accordance with the psychological profile


People come into investing, having behind them life experience, psychological patterns, habits and inclinations. All these factors must be taken into account in order to accurately determine your risk tolerance and, in accordance with this, choose an investment strategy.

There are several basic psychological profiles of stock investors, we wrote about them in this article . In accordance with them, in periods of uncertainty and stock market collapses, one of the investment strategies can be chosen. Cautious investors are more likely to prefer a defensive strategy. It implies initial investments in larger companies with a stable position, a serious history and good income. Typically, the stocks of such giants suffer less during periods of market turbulence.

You can read more about strategies for behaving on the stock exchange in the conditions of falls here .

Low risk investment tools exist


In recent years, the investment sector has been actively developing, resulting in a number of low-risk instruments that are suitable for beginner investors.

For example, these include model portfolios . They consist of several securities selected on certain grounds (for example, bonds or shares of one sector of the economy).

Also a good option is investing in federal loan bonds (OFZ). This instrument is issued by the state, and a refusal to pay coupon income on OFZs will be tantamount to default - with corresponding consequences for the entire economy. So such bonds are one of the most reliable assets that can be bought on the stock exchange.

Dividends and taxes are two other important factors.


One of the ways to get extra income with minimal risk is to buy shares of companies that pay dividends. According to statistics, the profitability of payments of domestic companies is at one of the highest levels in the world - about 6%. According to analysts, at the end of 2019, it amounted to 8%. This is significantly higher than the average 3% return on emerging markets and 2.4% on developed ones, including 1.8% in the US and 3.6% in Europe.

Not so long ago, ITI Capital analysts examined the shares of companies that pay dividends and selected the list of the top 30 issuers in terms of profitability / risk.

Do not forget that taxes can also be attributed to exchange trading costs. It often happens that incorrect calculations lead to situations in which profit from transactions is “eaten up” by subsequent tax payments. There are several legal ways to optimize taxation for stock investors.

  • Use of losses - if some shares from the portfolio have fallen in price during the year, and their price is below the level of purchase, then before the end of the year you can sell them and record the loss. This will reduce the total profit for the year, which means there will be less tax, and shares can always be bought later - if the strategy requires it.
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