Startups and organisations that care about environmental sustainability are only a few of the contemporary investment ideas that you can choose instead of the standard investments in real estate, financial markets or valuable works of art.
Investors’ psychology has changed
In recent years, the Latvian and global economy has mostly been stable, changing the psychology of investors. These days, clients are much more aware about financial markets. Their growing interest is reflected by their increased knowledge and experience. As a result, clients are not only more confident in their decision-making, but are also aware of the consequences of their decisions. They are more open to new technologies, choosing platforms and becoming proactive investors who make decisions faster and expect a quick result.
Are we going to digitalise Private Bankers?
This year Luminor is actively working on an ambitious programme to improve clients’ digital experience. Although this initiative will become a part of Private Banking services, the human aspect and relations still remain the most important asset. Investments are an opportunity for people to reach their financial and life goals and a Private Banker is an important source of support along the way. Trust in the particular professional is a high priority and this is not going to change any time soon. A Deloitte study1 shows that when it comes to the choice of Private Banker, the most important factors for bank customers in Europe are a personal relationship followed by the reputation and financial stability of the bank. This conclusion is confirmed by our interactions with our clients.
It’s trendy to think about the future
Customers are increasingly opting for long-term investments. If investments with a horizon of one year were considered to be long-term investments in the past, nowadays clients are ready to invest their assets for periods up to five or even ten years. It is popular to think about the future in the form of investments for the retirement or children’s education. Therefore, clients are no longer so afraid of long-term investments. As a result, long-term investments also tend to be more aggressive in nature.
New / modern investment opportunities
In the world of investments, new options are continually emerging where assets can be invested in order to grow capital. In addition to traditional investments like real estate, securities, bonds and art, people are increasingly investing in previously unknown areas of investments. Younger investors tend to be more impulsive, ready to try something new and modern, investing in startups or participating in crowdfunding projects. They have obtained their capital quite recently and ready to take on more risks. Young people are also willing to try out digital FinTech technologies. However, in most cases they tend to be cautious, investing only a small portion of their allocated funds.
A new trend is investments that are made in accordance with environmental protection, good governance and social standards. They offer the possibility of growing one’s capital, at the same time making an additional social investment in initiatives that aim to make the world a better place. Investors tend to invest in socially responsible businesses such as those that generate renewable energy.
Another realm of investment is cryptocurrency or bitcoin, but this is more like speculative high risk transactions.
How to choose an investment type?
The choice between a conservative and aggressive investment strategy highly depends on the investor’s own personality and mentality, as well as on the degree of effort that the investor has put into obtaining the funds for investments. Each individual choice varies depending on the client’s personal goals, investment horizon, risk appetite and total wealth. The classic investment type is to diversify one’s funds between investments in business, property and banks. Globally, art is also a very popular form of investment and is also practiced by investors in this part of the world. Meanwhile, clients are ready to invest in startups that could be riskier types of investments.
Since there are many investment choices and customers can get confused, it is important to have a long-term cooperation partner in the form of a Private Banker who is aware of the client’s individual situation. As a result, the client can get professional investment advice and make the best choice.