Hello Readers!
The ongoing COVID pandemic impacted both the poor and rich equally. It clarified that no one is immune to the damages caused by any sudden pandemic events like the COVID, irrespective of their health and wealth. This pandemic has made people understand the importance of both beings, physically and financially fit!
The realization of the fact has made many investors especially high net worth individuals, rethink their investing strategies. They have again taken into consideration how they will fund their liquidity, growth, and legacy needs, and brought certain changes in their investing habit reliable to pandemic-like situations.
Let us see how pandemic has brought changes in the investment strategies of HNI (High Net-Worth Individual) investors.
Risk Is Now Analyzed Differently!
The pandemic underscored the importance of risk mitigation in all spheres of our life. Whether it is health or wealth, taking unnecessary risk is a complete no-no. However, the perception of unnecessary risk has changed. While wealth preservation has always been one of the biggest mandates for UHNWIs along with wealth growth, the focus on the former is now increasing. Everyone is now concerned about liquidity. This could be for meeting large health-related expenses or for dealing with any sudden financial situation.
Diversification has also taken a new perception. Investors now fear concentrating their investment in a specific geography; thus, they are looking towards adding international stocks or funds to their investment portfolio.
Taking Interest In New Opportunities Amidst The Pandemic!
Although HNI investors are concerned regarding the risk in the portfolio and their wealth preservation amidst this pandemic, also on the other side they are showing a good interest in investing in new opportunities for long-term wealth creation. Wealthy investors are increasingly looking to invest in innovative startups that are either challenging the status quo or creating solutions to elevate their respective ecosystems.
They are portraying their portfolio in such a way, that they can reduce the risk, enhance their return along with taking the advantage of new startups in the long term. For example, instead of purchasing real estate directly, they are showing a preference for investing in Real Estate Investment Trusts (REITs).
Responsibility Towards The Ecosystem!
Pandemic has been proven devastating to everyone, be it individual, family, or businesses. It has impacted the whole ecosystem and made us realize how important it is for us to protect our ecosystems together. The devastation that the pandemic brought, made people understand the need of contributing towards the benefit of society and the environment around us. This has led to an increasing desire to contribute among wealthy investors.
Investing just for personal profits is no longer the mandate. People want to generate positive profit. As a result, an increasing number of UHNWIs are gravitating towards Environment, Social, Governance (ESG) investing which entails the use of ESG screens in addition to fundamental screens for choosing portfolio investments.
Simply, we are in the phase of change, a change in the way we live, work, and interact with our friends and colleagues. This changing phase also demands a change in the way we invest!
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Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).