War is a time of unpredictability when confidence in the future disappears, making financial decisions particularly risky. In peacetime, investors tend to think long-term, considering options such as stocks, real estate, and startups. But wartime changes this logic.
The priority is to preserve capital and ensure liquidity, and only then seek returns.
Where should you invest your money during wartime?
The primary goal of an investor during wartime is not to make quick profits, but to preserve funds and ensure they are readily available at all times. Therefore, it is best to choose low-risk instruments, even if their returns are limited.
Domestic government bonds
These are a classic option that are considered one of the most reliable instruments in times of crisis, since the state is the main guarantor. Currently, these securities offer higher returns than bank deposits and protect against inflation. For an experienced investor, bonds offer the chance to combine confidence and stability with a relatively predictable income.
Gold and precious metals
These are safe-haven assets that have historically retained their value during turbulent periods. War is no exception; demand for gold usually rises, and it acts as insurance against the devaluation of national currencies.
Cash, dollars and euros
These are fundamental to financial security, serving as both a store of value and a tool for flexibility.
Real estate in safe regions Although demand may fall during wartime, purchasing residential or commercial property in more stable cities can be a form of capital protection for long-term investors. This is a strategy for conserving funds, not a speculative game.
Bank deposits
Although less flexible than currency or gold, they provide interest income and convenience. The key is to choose banks that are part of a system with state support.
Ultimately, during wartime, the rule of 'less risk, less stress' applies. Instruments that seem modest in peacetime become essential in times of crisis.
The nuances of investing in wartime
The importance of liquidity increases
Instruments that appear attractive in normal conditions due to their high returns may lose their appeal if they cannot be quickly converted into cash. Therefore, investors seek solutions that allow them to remain flexible.
The significance of diversification rises even more
Holding all funds in one asset or one country is too risky. Consequently, even private investors are beginning to diversify their capital, holding some in currency, some in a bank, and some in gold or real estate. Venture investors add another dimension: geography. If a startup does not have access to the international market or an office abroad, the risks of the project become significant.
War creates unique growth niches
Demand is concentrated in the areas of security, medicine, logistics, and energy. There are opportunities here for venture investments, but they require a very high tolerance for risk. It is possible to find points of growth even in crisis conditions, but it is best to focus on those that directly meet society's basic needs.
Planning horizons are becoming shorter
While it was previously possible to develop a strategy spanning 5–10 years, it is now wiser to consider timeframes of several months to a year in wartime.
Psychological discipline is key
When panic ensues, it is easy to succumb to emotions — withdrawing all your money, buying extra cash, or conversely taking risks based on rumours. However, it is precisely the ability to think calmly that distinguishes an investor who has preserved their capital from one who has lost it.
Therefore, investing during wartime requires a balance of security, liquidity, and diversification. Although profitability takes a back seat, the main task is to emerge from the crisis with something that will enable you to rebuild and grow your finances in peacetime.
Bank and foreign currency deposits
Although a bank deposit may seem like a simple instrument, its value is particularly evident in times of war. They provide stability, predictability, and peace of mind.
The main advantage of deposits is the guaranteed income they provide. When markets are unstable and prices fluctuate daily, the bank's interest rate offers a sense of stability. Government guarantees are also an important factor. In many countries, including Ukraine, there is a deposit insurance system that covers deposits up to a certain amount, which minimises the risk of loss.
Another consideration is urgency. In wartime, it is difficult to predict events even a few months ahead, so overly long-term deposits are not always advisable. It is better to choose shorter terms with the option of extension, or to split the amount into several deposits with different maturity dates.
Precious metals
Precious metals, especially gold, have always been considered a refuge for capital. They become even more relevant during wartime, when confidence in the banking system or national currency may decline.
Gold has a unique property in that it does not depreciate to the same extent as paper money during periods of inflation. In fact, its price often rises in times of crisis. For instance, during the global wars and financial turmoil of the 20th century, the value of gold was an indicator of distrust in the economy. This makes gold a universal means of preserving value.
Other metals that can also be considered include silver, platinum, and palladium. While they are less stable in price, they have their own markets and industrial applications, which adds to their demand. For investors, this provides an opportunity to diversify their defensive assets.
There are several ways to invest in metals. The simplest is physical gold in the form of bars or coins. The advantage of this is that it is independent of banking risks. However, there are also disadvantages, such as storage costs and the risk of theft. A second option is metal accounts with banks, where you own the equivalent of gold without having to store it physically. A third option is metal ETF funds, which are available through international exchanges but require you to open an account abroad.
Gold rarely generates active returns because it does not generate interest or dividends. Its role is to protect against risks and preserve purchasing power. Therefore, investors usually include it in their portfolios at a level of 10–20% of assets.
Real estate
Real estate is traditionally considered a 'hard' asset, capable of weathering any economic storm. In peacetime, it not only serves as a means of preserving capital but also of increasing it through rental income and property value growth. However, the situation changes in wartime, so investing in this sector requires particular caution.
A clear understanding of the geographical location is essential, as this becomes a key criterion. While investors focus on the prestige of the area, transport accessibility and infrastructure in peacetime, during wartime, security of the region, distance from combat zones and the likelihood of recovery after the conflict ends become more important.
Demand is also changing. People are looking for small flats that they can move into quickly, houses in safe areas or commercial space for displaced businesses. This creates an opportunity for investors to purchase properties that can be rented out quickly to internally displaced persons or entrepreneurs.
Real estate is less liquid during wartime. It can be hard to sell a property at a fair price because demand is lower. Therefore, you should only invest funds that you can afford to tie up for several years. In this sense, real estate is better suited to long-term investment than short-term solutions.
Another essential consideration is repairs and insurance. Even if the property is located in a relatively safe area, there is still a risk of damage. The cost of insurance increases during wartime and must be factored into the budget.
Government bonds
Domestic government bonds have become one of the most talked-about investment instruments during the war. This is understandable, as they offer the stability of state guarantees alongside the potential for higher returns than bank deposits.
Essentially, it is a process of lending money to the state. In exchange, the investors receive interest income and the full amount upon maturity. In a crisis, such a mechanism also supports the economy: every hryvnia invested helps finance the defence and reconstruction of the country.
The advantages are obvious. First, reliability. Even in challenging circumstances, the state does everything in its power to fulfil its obligations. Secondly, profitability. Rates on government bonds are often higher than deposit rates, particularly for the national currency. Thirdly, there is the option to purchase bonds in hryvnia, dollars or euros, which adds variety.
However, there are some nuances. The main risks are inflation and devaluation. If the hryvnia depreciates faster than the interest rate on the bonds, the investor's real income will decrease. The term must also be considered: government bonds are issued for periods ranging from several months to a year or more. For wartime investors, overly long terms can be problematic as the situation is changing rapidly.
Another important detail is liquidity. While bonds can be sold on the secondary market, it is not always possible to do so profitably. Therefore, it is better to plan your investment horizon.
From a venture capital perspective, government bonds are not a means of making quick profits; rather, they are a source of financial safety. They enable you to secure part of your capital in a relatively stable asset, helping to offset riskier investments.
Ukrainian military bonds deserve a separate mention. They operate as a form of donation to the army with a guaranteed return. Other advantages include tax-free payments and higher yields. However, there are still disadvantages, meaning that the fixed income you receive may lose its real purchasing power.
Currency and cash
In times of crisis, currency is always seen as a lifeline. The US dollar and the euro are traditionally considered the most reliable means of preserving value. Demand for them rises sharply during wartime, as people seek protection from the devaluation of their national currency.
The biggest advantage of currency is its versatility. It is accepted everywhere, enabling you to travel abroad quickly or purchase the goods you need. This is why even the riskiest investment portfolios recommend maintaining a currency reserve.
However, it is important to understand the risks involved. Holding large sums of cash can be dangerous in terms of both physical security and the risk of losing money due to inflation or black market exchange rates. Furthermore, exchange rate fluctuations are here to stay: even the dollar can strengthen or weaken depending on global economic trends.
Another consideration is storage. It is worth keeping some of your currency in a bank or foreign currency deposit account and some in cash for quick access. This strikes a balance between accessibility and security.
Alternative investment options during wartime
In times of crisis, less obvious opportunities often arise that can provide a way to preserve and grow your capital.
One such option is to invest in your own business
War radically changes demand patterns, and those who react quickly can benefit. For instance, the logistics, food, IT security and remote working sectors have experienced rapid growth. While investing in a small business or startup can be risky, it can also lead to significantly higher returns than traditional investments.
Another area to consider is investment in education and professional development
At first glance, this may not seem entirely finance-related, but knowledge and skills are actually the most valuable assets, especially in times of uncertainty. Acquiring a new specialisation increases your value in the labour market and opens up additional sources of income.
International financial instruments are an equally interesting alternative
By accessing foreign brokers or banks, you can buy shares in global companies, index funds (ETFs), cryptocurrencies or even foreign real estate. While this requires greater financial literacy and knowledge of the rules, it also creates diversification — your money is working outside the country where the war is taking place.
Investments in tangible assets that retain their value regardless of currency fluctuations are also worth considering. These include land (particularly agricultural land), antiques, works of art and collectables. They have limited liquidity, but can provide a stable foundation for your capital.
Of course, all of these options carry a higher level of risk compared to traditional investments. However, it is precisely in times of war that these alternatives can be lifesavers — they facilitate development, whereas standard instruments merely preserve value. The key rule is to invest only the part of your capital that you are prepared to freeze or even lose, while still leaving yourself the chance of a high return.
What should you consider when choosing an investment direction?
Risk level
During stable years, we are accustomed to assessing risk as the likelihood of changes in returns. During wartime, however, risk takes on a broader meaning, encompassing loss of liquidity, destruction of assets and the inability to transfer money abroad. Therefore, the first step is to realistically assess what could happen to your money in the worst-case scenario.
Liquidity
How quickly can you access your capital? Deposits are blocked for a set period, bonds require a resale market, and real estate may remain vacant for months. During wartime, liquidity often becomes critical, as situations can change in an instant.
Diversification
It is never wise to keep all your money in one place. The ideal crisis-proof portfolio is a combination of several asset classes: some in currency, some in liquid instruments and some in long-term assets. This way, even if one element is lost, the others will remain protected.
Geographical distribution
If you have the opportunity to open accounts or invest outside your home country, it is worth doing so. This will provide an alternative option that will enable you to safeguard your capital in the event of force majeure.
Your own goals
Some prioritise preservation, some quick access to funds, and some creating a foundation for future development. There is no one-size-fits-all solution; an instrument that is ideal for one person may not be suitable for another.
In addition, you must take into account tax conditions, withdrawal rules and legal restrictions. During wartime, these can change quickly and unpredictably.
Conclusions: How can capital be preserved during wartime?
In summary, wartime is a period when investments cease to be merely a matter of interest rates or returns. First and foremost, it is a strategy for capital survival.
You need to think differently: the important thing is not to make a profit, but to avoid loss. Therefore, safe instruments come to the fore, such as currency, deposits, government bonds and precious metals. They will not generate substantial profits, but they will ensure that your money does not depreciate instantly.
It is significant to create a liquidity reserve. You should have funds available at any time to cover at least several months of living expenses. This will give you confidence and freedom of action if the situation changes.
Diversification is your shield. Combine different assets: some in hryvnia, some in foreign currency, and some in gold or bonds. This will enable you to withstand even unforeseen shocks.
Finally, you need to maintain emotional discipline. Panic is an investor's worst enemy. Keeping a cool head, making a clear assessment of the situation and having a clear strategy will help you avoid making chaotic decisions.
The war will end sooner or later. Those who manage to preserve their resources during this difficult time will have a huge advantage when it comes to recovery and development after victory. Therefore, investing wisely today is about more than just money; it's about securing a better future.
