Disclaimer: information in this article are solely my opinions and not to be taken as an official financial advise. The content is based on my perception of current situation and data from multiple resources. There is always risk in volatile stock market especially when some major unforeseeable events happen, like... Global Pandemic. None of us could have predicted this major economic collapse last year.
We are facing a global pandemic that has affected all areas of our planet. As the coronavirus pandemic spreads, many businesses are forced to close their doors. This is causing a financial crisis. The last time we saw a global economic crisis was in 2008. Recent reports suggest that we may face a more serious pandemic this time around, with coronavirus affecting millions around the world.
You may feel stressed about how the coronavirus pandemic is going to affect your financials. Investing is becoming a big concern now, with thousands of companies closing down. This does not mean investments you make now will not be fruitful in the future. With some smart investing tips, you can continue to experience growth in your money, even as we face a financial crisis.
The short-term fluctuations in market, which loom so large to investors, have little to do with the long-term accumulation of wealth
- Jeremy Siegel
What To Avoid When Investing During The Financial Crisis
Before you start investing during the financial crisis, you need to know what to avoid. This can save you from losing thousands of dollars. You want to gain a profit from any investments that you make, after all.
The research will be your best strategy during the COVID-19 pandemic. Without doing research, you may find yourself making poor decisions. This can lead to investments that will not yield a profitable return – or perhaps even cause you to lose the money you invested.
You also want to avoid making an investment that is larger than what you can afford to lose. The risks are high during the crisis – so be careful when deciding how much you can really invest—making investments that are too large could end up a big disappointment.
Tips For Smart Investing During The Pandemic
When you know what to avoid, it becomes easier to be smart when investing during the financial crisis. The coronavirus pandemic has caused a significant fall in stock markets. Between January and April, there has been a 28.8% decline in FTSE, a 22.2% decline in Nikkei, and Dow Jones have also fallen by 24.1%. The FTSE experienced the biggest single-day decline since the year 1987 in April.
Even though stock markets are plummeting, there are still opportunities that you can invest in. We share a couple of tips to help you make smart investment choices during a financial crisis below.
Do Not Invest More Than You Can Afford
First of all, sit down and take a look at your finances. During this time, people are clinging to their money – for a good reason. You need money to survive in the modern world. With this in mind, the most important tip we can share is to avoid investing more than what you can afford.
Due to the risks, there are in a financial crisis, and you have a chance of losing money that you invest.
Consider Your Financial Needs For The Near Future
You also need to take your short-term financial needs into consideration. While there are lockdowns in place that restricts you from shopping for certain items, essentials are still available. With this in mind, you need to ensure you know how much money you will need to live in the near future. Make sure you budget for everything that will be needed – and set a budget for unexpected expenses.
When you know how much finances you will need in the near future, you can deduct this from the money you have available. This will give you an idea of how much you can invest.
Diversity Is Key When Investing In A Financial Crisis
Many sectors face risks during a financial crisis, but it does not mean each of these sectors will fall. There are times when some sectors facing a risk will come out on top as we take control of the crisis.
This is why diversity in an investment portfolio is critical. Even when you have little funds available for investing purposes, avoid adding all of your money to a single investment opportunity. If that sector falls, you will suffer greatly.
Diversifying your portfolio can help you avoid significant losses. Sure, some of the stock you invest in during the crisis may end up falling. There will, however, be some that thrive. The profit gained from those that thrive following the crisis will likely make up for other losses that your investment portfolio suffered.
Look at multiple investment opportunities that hold potential during the crisis. Consider ore sector stocks. You can also consider investing in different real estate opportunities, along with some dividend stock markets.
While a financial crisis is on hand, there are still many investment opportunities that you can turn to. It is important to realize that the current pandemic will not last forever and that recovery is possible once the crisis is under control. Being smart with your investments is more important than ever before. When investing, do research, and make decisions based on internal and external factors.