Reinhard Panse's Perspectives
Reinhard Panse's Perspectives
Podcast
30.10.2022
When the night is at its darkest, dawn is not far away. Most readers are probably familiar with this old proverb, which exists in many different variations. As romantic as it sounds, it also applies to the current situation on the financial markets. At the moment, everything points to a recession in Germany, Europe and the USA, which is likely to put a massive brake on economic growth in the coming years. However, this is not the time to throw up your hands in disbelief, but to increase your own portfolio.
This is because, as both historical and current data show, there are some indications that real estate, gold and shares can be a worthwhile investment right now. Take residential real estate, for example: the current rental yield there is only three percent, while the mortgage interest rate is already four percent. A bad deal at first glance. But now you have to add the future rental growth, which can be calculated from the past ten-year inflation rate and which is 2.7 percent. The yield already turns positive, especially when you consider that the inflation rate is likely to be lower than at present. Accordingly, we expect a total return of 6.5 percent for real estate.
In the gold sector, too, historical data currently points to a good entry point. The shiny metal has always been very strongly linked to inflation and still is today. However, our calculations show that even if the inflation rate reaches an average of 3.5 percent by 2032, gold is likely to achieve an average annual return of ten percent. That leaves equities. If the assumption that inflation rates and interest rates will soon exceed their peaks is correct, the current price losses in equities could be offset in the next one to two years. Added to this is the current opportunity to buy shares much more cheaply on the stock market than just a few months ago.
The dawn can no longer be so far away.
Reinhard Panse's Perspectives
30.10.2022
Reinhard Panse
Everything currently looks like a looming recession. So is now the perfect time to buy real estate, gold and shares?
When the night is at its darkest, dawn is not far away. Most readers are probably familiar with this old proverb, which exists in many different variations. As romantic as it sounds, it also applies to the current situation on the financial markets. At the moment, everything points to a recession in Germany, Europe and the USA, which is likely to put a massive brake on economic growth in the coming years. However, this is not the time to throw up your hands in disbelief, but to increase your own portfolio.
This is because, as both historical and current data show, there are some indications that real estate, gold and shares can be a worthwhile investment right now. Take residential real estate, for example: the current rental yield there is only three percent, while the mortgage interest rate is already four percent. A bad deal at first glance. But now you have to add the future rental growth, which can be calculated from the past ten-year inflation rate and which is 2.7 percent. The yield already turns positive, especially when you consider that the inflation rate is likely to be lower than at present. Accordingly, we expect a total return of 6.5 percent for real estate.
In the gold sector, too, historical data currently points to a good entry point. The shiny metal has always been very strongly linked to inflation and still is today. However, our calculations show that even if the inflation rate reaches an average of 3.5 percent by 2032, gold is likely to achieve an average annual return of ten percent. That leaves equities. If the assumption that inflation rates and interest rates will soon exceed their peaks is correct, the current price losses in equities could be offset in the next one to two years. Added to this is the current opportunity to buy shares much more cheaply on the stock market than just a few months ago.
The dawn can no longer be so far away.
About the author
Reinhard Panse
Reinhard Panse is Chief Investment Officer and co-founder of FINVIA Family Office GmbH. Until February 2020, Reinhard Panse was a member of the Management Board and Chief Investment Officer for HQ Trust GmbH, which is owned by the Harald Quandt family. From 2004 until joining HQ Trust GmbH in 2011, Reinhard Panse was Chief Investment Officer of the UBS Sauerborn business unit created within UBS Deutschland AG. From 2001, Reinhard Panse was a member of the Management Board of Sauerborn Trust AG and its legal predecessors. He was responsible for the investment strategy and played a leading role in the holistic asset management and administration of large private assets. Reinhard Panse began his career by taking over capital market and client support activities at Feri GmbH in 1989, after having founded and managed his own wealth management as managing director.
