Which investment possibilities are there for minimizing the risk that your cash savings (for simplicity let's say 100,000$) will severely lose value during the corona crisis?
The focus is on avoiding high loss, not on little loss or even high returns.
Though there are a lot of similarities with preceding crises, the upcoming high amount of unemployment and newly "printed" money makes me wonder whether/how far the economy will further crash (see also Why isn't the market dropping like a stone with all the bad news?), and what my options are to minimize the risk of severe losses.
My research led me to the following possibilities for my savings, all of which have remaining risks I have difficulties to rate:
- in physical gold: that is quite costly and difficult to get now (while ETCs are not separate estate). Furthermore, the value might drop once it turns out that no high inflation is coming
- hold in cash: Though right now "cash is king", we might soon get a high inflation, which strongly reduces the value of cash. Furthermore, if banks go bankrupt, how high are the risks of bail-in? In the EU, we have EDIS (e.g. the German "Einlagensicherung" up to 100,000€ per person per bank), but the EDIS fonds is quite low and I do not understand the relation to bail-in.
- bonds: This has less risk than point 2 since banks usually go bankrupt before states. You can avoid loss from inflation by using inflation-indexed bonds. But which highly rated country is best? Switzerland, Germany, US? What if the bank holding your bonds goes bankrupt? Is there EDIS for banks?
- stocks: stocks are separate estate (even via ETFs). But the corona crisis is just at the start, so the stock prices might still drop severely and require many years to recover.
- crash fonds: they are supposed to protect you from falling stock prices, e.g. via (short term) futures. I cannot estimate their risk. E.g. Dirk Müller Premium Fonds (ISIN DE000A111ZF1) did not drop during the corona crisis (the long term share price does not go much up or down). But are these crash fonds trustworthy? The website and videos of Dirk Müller seem like a big marketing campaign, which makes me skeptical.
- real estate: an economic crisis usually also makes the real estate market drop after a delay. It is also a complex market and thus difficult to quickly find a good investment.
So how severe are these downsides? Did I miss further downsides or even better possibilities?
Should I combine several possibilities (also see How do I minimize the risk of my investment losing value?)? If your answers do not change my plans, I will successively invest in stock ETFs (MSCI World and MSCI EM), over several months. But during that time, I wonder whether holding all remaining savings in cash (point 2) is the way to go.