Experts say that the current economic situation is only going to get worse as the coronavirus pandemic develops and seemingly shrouds the entire earth. In such times, people don’t know how to prepare for the future but, most importantly, they don’t know how and where to invest their money.
The economy may be affected in such a way that certain currencies may lose value over time. With such a prospect in mind, people are exploring their investment options – in a market where every stock seems to crash overnight.
Let’s see how you – beginner or professional investor – should invest during the pandemic!
How to Invest?
First, let’s look at how people should invest in such times – because not all of them should invest in the same way!
As we mentioned, we have both beginner and professional investors in this story. The beginner investor is more open to long-term profit and a future of wealth. On the other hand, the professional – and soon to be retired – investor is looking to stock up on funds for their near future/ retirement.
- As such, young investors should bear with the current situation, especially if they can sustain themselves. Use this downturn of the market to buy everything you come across – why? Well, when the market went down in 2009, people bought stocks. Ten years later, those stocks saw an annualized return of almost 20% – thus promoting wealth.
- Naturally, investors who are close to retirement should start selling some of their assets. The rule here is that you plan on spending money in a couple of months or a year or two, then those funds should not be in stocks as the markets can always go down and ruin you financially. In extreme cases, investors may also consider delaying their retirement.
Finally, retired or not, investors that have backup funds in place should use those funds to pay their bills and stop the income from their investments entirely. After all, investors should not sell any of their investments when the market is way too crashed.
The Basic Rules of Investing
You should also not forget the basic rules of investing – even though this is a special scenario. Use the free time you now have – due to self-isolation – to do a bit of research and prepare your plan of action.
For example, you can analyze how the economy behaved after the 1930’s Great Depression or during the 2009 crash of the stock market. There are also many experts sharing their opinions now – so this may be the best time to engage in copy trading.
Where to Invest?
We mentioned above that, as a young investor, you can now buy every single stock you come across. Well, you’re not going to buy the ones that are crashing – if you remember the basic rules that we just talked about.
As such, here’s a list of the stocks and sectors that seem specially designed to survive and even thrive during a pandemic:
Mainly due to them taking part in the search for treatments for the new virus, health care, and biotech sectors seem to not be as affected – in terms of things to invest in.
Moreover, CBD companies such as Joy Organics seem to stand quite strong as well, probably because such products help with anxiety and depression – a few of the many things that people feel right now.
After all, the health care sectors will always be backed by funds, no matter the situation, because the entire world relies on them.
Safe Haven Stocks
When it comes to investing, safe havens are the investment opportunities that are expected – and mostly known – to either maintain or even increase their value when the rest of the market is affected.
Gold, treasury bills, cash, and defensive stocks (such as healthcare and biotech), are just a couple of the safe havens that people can invest into in times like this and have their funds in a safe place.
Even if teleconferencing companies got pummeled after their stocks got way too far and too fast, teleconferencing software companies are still one of the top categories to invest in, as more and more people depend on them to fulfill their work.
Even education now relies on such software. As a prime example, we have Teledoc Health, Inc. that has increased by roughly 30% since the second month of this year.
If you’re a risky investor, then you may have already engaged in market timing. This implies making sell or buy decisions based on predictions of the market price movements. In short, if you have enough experience, you can tell when a stock is going to plummet and sell minutes before it does so.
Although risky, a trader may take advantage of gold going down for two times in a row to purchase stocks right before its value goes back again – or otherwise. Believe it or not, there are more than enough traders who listen to their gut and base their investments on predictions.
However, if you’re not in a financially stable condition, we don’t recommend engaging in market timing.
The Best Things to Do
Overall, rookie investors should tread carefully and do their best to make good investments only – especially if a bad one is going to put them and their funds at risk.
On the other hand, professional investors should also think twice before engaging in a risky investment. One wrong move, and they may lose their retirement funds – or even the wealth that they’ve built so far.
For example, there are traders that, during uncertain market times, may put all they have in a stock that they think will plummet and then rise above everything else. Naturally, this doesn’t happen very often, and that stock they trusted so much may remain in a plummeting position for a very long time.
The Bottom Line
In the end, when it comes to where and how to invest during the pandemic, it’s recommended that you first look at your supply of cash/funds that you have to live with at the moment. If you have enough, then you’ll want to stop investing and only manage the stocks you currently have. If you need more, try selling and, if you don’t have enough, try to make a profit while you still can!