With the corona virus pandemic, as it was aptly named by the W.H.O ravaging the world economy, Companies all over the world are either shutting down completely, or cutting back on production and sending workers home as governments rush to contain the virus. Airlines and the hospitality industry have been the worst hit.
The overall roll over effect is palpable with millions of workers not being able to get a paycheck, meaning a significant reduction in the overall purchasing power of the global population. Reduction in manpower also means a reduction in the productivity of companies’ therefore lower revenues.
Lower company earnings mean reduced profits or huge losses putting many companies at risk of closing down. Economic conditions like these have not been experienced since the housing market bubble burst in America in 2008 sending the world economy into a freefall. In conditions like these the most predictable outcome is high levels of inflation.
Inflation is a quantitative measure of economics which occurs when the purchasing power of a currency becomes lower relative to the price of commodities, thus the actual value of money used to buy goods increases but the amount of goods bought stays the same or is lowered.
With all economic indicators are pointing towards a global recession, it is however not a hopeless situation, investors can choose to safeguard their capital in three classes of assets considered safe and less risky.
During times of global economic crisis, investors flee to what is normally considered less risky forms of investments, globally traded commodities like gold and oil are normally considered a safe heaven. However, in the current corona virus pandemic there has been an exception to this norm.
The price of gold had been plummeting as investors are getting increasingly jittery. Likewise, the prices of oil have been at an all-time low since 2011 caused by the row between U.A.E led O.P.E.C and Russia, the corona virus has also acted as a catalyst in driving down the prices of oil.
b) Government Bonds.
Government bonds offer a guarantee on returns after a fixed period of time. They are however not immune to fluctuations. In some instances, the level of inflation is so high that it erodes the future purchasing power of future cash inflows. So by the time you are getting your returns on investments your purchasing power has been watered down.
c) Real Estate
Real estate remains a holy grail when it comes to a safe form of investing. Global crises are usually kind to investors in real estate, land in particular has an alluring appeal to it. Investing in land during a crisis such as the one we are currently experiencing will not only safeguard you from inflation but it will guarantee increased returns on investment. The rule of thumb is, the value of land will rise, and this is true even in the midst of the corona virus outbreak.
Real World Example
As enticing and colorful as gold coins and bullions may sound it is still not impervious to loosing value and neither are bonds. Alternatively if you decide to invest in a piece of land in Machakos at Kijani hills for example, you not only get peace of mind from securing your capital, you also get an expected rate of appreciation on the investment at a guaranteed average of 8.75% 1 year on year.
This would cushion you against any losses and virtually giving you a safe haven against the impending global recession. Kijani hills offer a panoramic view of mua hills, just five minutes from Machakos and three minutes from Machakos junction.
Choose the safest way to make an investment, invest in land, and invest with Mhasibu housing company limited. Your journey to securing your financial freedom starts with a call.
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Head Office: Maendeleo House, 5th Floor, Along Monrovia Street
Postal Address: P.O. Box 47427 – 00100, Nairobi, Kenya
Tel: +254 722 668700, +254 722 668887