How investing has changed in the last 20 years
Over the years, investments have undergone significant changes and approaches. The market is constantly changing and opportunities are increasing, which is why investors have been re-evaluating their financial portfolio.
According to an analysis by Focusrisparmio based on data published by the Bank of Italy, investments (especially by Italians) have been significantly transformed. Over the course of twenty years, markets have had to face and resolve major financial crises .
The investment bubble and financial recoveries in twenty years
In a scenario where the markets have been revolutionized , financial portfolios have also undergone a radical change. Between the evolution of the sectors, the geopolitical uncertainties, the doubts about inflation and the global economic volatility, the majority of investors have opted for smaller capitalisations.
The first speculative move occurred around the 2000s. The Dot-com Bubble (companies specializing in online navigation) attracted a series of investors who were aware – already at the time – of how the internet was becoming increasingly popular.
In 1999, shares in financial portfolios had reached historic highs (quantified as 150 billion euros). But like any financial bubble, the bursting of the "internet" bubble occurred at the end of 2001.
Coinciding with the collapse of the Twin Towers, the value of the shares halved in the blink of an eye (from the previous 150 billion to 85 billion euros).
The partial growth was concentrated on government bonds (from 6.2% to 8.2%) and on social security and insurance products (from 9.9% to 11.9%).
Before the financial crisis that occurred between 2007 and 2009, in the year 2006, Italian savers kept their capital in deposits, bonds and insurance products.
The great subprime crisis
A lesson in financial terms (valid for creditors and investors) was the subprime crisis which occurred around the end of 2006. The economic repercussions (with a sharp cut in GDP) and employment (reduction in employment) made their appearance already in 2007 .
The crisis began in the United States of America, and no (or almost no) economic maneuver could have saved from the economic deficit of the time. Only the investment in safe haven assets could in a certain sense have contained the damage that then lasted for years.
The financial instrument most penalized during the subprime crisis was the investment fund. On the other hand, the error started from the main credit institutions which began to accept loans from individuals with a "problematic" credit history.
The wait for a new era
In the periods following the subprime crisis, Italian families had to rebalance their investment plans by always keeping a certain sum allocated to government bonds and another to safe haven assets.
But another change was in the air: the year 2020, the one in which the entire world was hit by a health pandemic with Covid-19. The financial scenario has forced new maneuvers to contain the economic damage caused by lockdowns across the globe.
During the two-year period 2020 – 2022, the most attentive investors analyzed the financial markets and focused on growth sectors (pharmacological and technological companies). Each investment plan includes specific precautions to avoid compromising the entire financial portfolio.
What are you investing in today?
Although the financial products are almost unchanged (bonds, BOTs, BTPs, deposit accounts, certificates of deposit, shares and gold) the solutions and possibilities are quite varied.
The new solutions (more cutting-edge and within the reach of many more investors) have allowed young people to enter the financial market even with little knowledge. This is the case of real estate crowdfunding , an option that allows you to invest in real estate even with a minimum capital of 500 euros.
Real estate crowdfunding – just to give an example – is one of the new investment methods that allow a large group of investors to be able to capitalize the desired amount (according to their possibilities) and obtain a common average return .
Another solution is car sharing companies. Mobility has also undergone very important changes in twenty years. These companies are able to rent vehicles (cars, scooters, electric bikes and electric scooters) conveniently via an application (and without the need to pay any deposit).
Every investor must have the ability to study the market and analyze the potential risks and potential of the sector. Financial markets are very volatile , which is why the possibility of losing everything is always very high.
There are no certain and safe investments, which is why to capitalize money you need to be scrupulous and analytical. It is clear that each financial maneuver depends on your objectives and the investment risks you want to take.
If you are one of the "constraining" investors, most likely the largest percentage of investments involves the payment into safe haven assets (gold and other precious metals).
In the last 20 years the world of investments has changed a lot and will change even more in the coming decades. The only way not to be left behind is to keep up to date through industry articles , always staying informed of news in the financial sector.
Finally, we suggest constantly studying financial market trends, understanding and exploring new possibilities.
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The article How investments have changed in the last 20 years comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/come-sono-cambiati-gli-investimenti-negli-ultimi-20-anni/ on Fri, 12 Apr 2024 22:47:57 +0000.