Who Stands to Benefit from the Credit Crisis

Banks, investors and even entire economies of countries are hurting from the fall out from the currently ongoing credit crisis. There is a saying however, that 'in every situation, someone stands to gain from another's loss'. So, who's best placed to benefit in the long term?

Generally those with cash; some have already made moves to capitalise on a battered financial market. There are several levels at which people (or organisations) will benefit from the credit crisis as outlined below:

The Small guy

One of the safest ways people have been investing in recent years is by putting money in a savings account, unfortunately, the credit crunch will not benefit those with money stored away in a savings account, its more likely to hurt your bottom line, how?; one of the ways central banks are trying to ease the impact of the credit crisis is by cutting interest rates; this means your savings are likely to earn you less interest than they did previously.

Those that are brave will see this as a good time to invest in stock markets, bonds etc, surely these more risky than a savings account, but the returns are also potentially very high; most stocks are lower than their value at the beginning of 2007 especially in the banking sector. If you choose your stocks carefully, there's potential to make a lot of money as the markets recover in the coming months.

Real estate investors

House prices are falling for the first time in 10 years and the trend is likely to continue for most of 2008 as more and more people find it difficult to get a mortgage.

Those with hoards of cash would see this as a good time to buy an investment property and given the level of foreclosures; they can get them at rock bottom prices. The good thing about investing in housing is that people will always a place to sleep, when the economy recovers, there will be a housing boom once again.

International investors

Financial institutions have expectedly taken a big hit from the credit crisis, most are in need of a financial injection to reposition themselves, this injection isn't coming from governments; instead, as we've thus far seen with Citi Group, Bear Stearns and UBS, these investments are coming from investor from China and the Middle East.

Currently shares in financial institutions are seriously under valued, international investors are set to make a big return when these shares finally return to their previous market valuation.