Money is one of the things that all of us spend a lot of effort and sacrifice our comfort to earn.
How to preserve that money is another stage of fatigue and effort we made.
During crises or when seeking to invest these funds, the first thing that the we think about is how to preserve it by investing them in a “Safe Haven”.
A good question we should ask, What Safe Are Havens?
As defined by economists, these are the characteristics of safe havens:
- A low-risk, high liquidity assets
- An investment that is expected to retain or increase in value during times of market turbulence
- They are sought by investors in the event of geopolitical or economic risks.
Examples of Safe Havens
There are a number of investment securities that are considered to be safe havens. Some of them include:
Gold: For years, gold has been considered a store of value. Investing in gold has low-risk, generates high liquidity.
Treasury bills (T-bills): Investors, therefore, tend to run to these securities during times of perceived economic chaos, especially those issued by high credit rating governments that are capable to pay back its value to investors.
Some currencies are considered safe havens compared to others, like the US Dollar being the Federal Reserve currency. The Swiss franc is considered a safe haven currency due to the stability of the Swiss government and its financial system. In addition to the Swiss franc, the Japanese yen also considered one given its historical gains that means less risks.
Defensive stocks: Regardless of the state of the market, consumers are still going to purchase food, health products, and basic home supplies. Therefore, companies operating in the defensive sector will typically retain their values during times of uncertainty, as investors increase their demand for these shares.
Recently, some new member joined the safe havens, including Digital Currencies, as Bitcoin (BTC) was the best performer among crypto-assets in the past nine years.