Should You Invest During Uncertain Times?

With the coronavirus pandemic still running rampant, investors are worried about the future. Months of restrictions designed to control the spread of the virus brought some measure of success, but as COVID-19 cases continue to pile up in the United States and Europe, governments are considering additional measures that will also put pressure on business owners and investors.

It’s easy to believe that an uncertain economic climate does not provide the ideal time to invest in assets and securities. However, you can still find opportunities for wealth-building when things aren’t looking up for everyone else. It’s better that you secure your future beyond such uncertain times by using whatever tools you can at your disposal.

Should you take the risk of investing during a crisis as serious as COVID-19? Surprisingly, it can be beneficial for a few good reasons:

  1. Diversifying your portfolio
    If you are investing in only one asset, you will be able to find other means to secure your cash flow if that asset isn’t performing well. A crisis can be a good catalyst for diversification. All you need to do is to spread your equity in markets that are seeing positive fundamentals. You can invest in renewable energy or communications technology, both of which have seen a spike in demand in the midst of the COVID-19 pandemic.
  2. Reconfiguring your investment strategy
    As you look for other assets to include in your portfolio, you will need to modify your investment strategy to better reflect current market conditions. The good thing about this is that you can change your approaches depending on how the market influences your tolerance for risk. Moreover, such changes can help you determine whether you should hold on to your assets or sell them to avoid loss.
  3. Exploring physical investments
    A recession or other major economic disruptions can give you enough reason to try investing in commodities, real estate, and other physical assets. The real estate market, for one, has been regarded as a safe haven when stock markets underperform. With interest rates now at historic lows, commercial real estate investors will eventually find golden nuggets amid the crisis. Meanwhile, investing in precious metals such as silver provides an excellent hedge against inflation. You only need to find if it’s your first time investing in precious metals.

There is opportunity in uncertainty, and investors should stand on their toes even as stock values plummet. It will take some time before the economy returns to a state of normalcy (and it sure will!), but until then, investors will need to arm themselves with the knowledge and the tools they need to survive current and even future crises. Here are some tips on how you can invest in the time of COVID-19:

  1. Stick to your guns
    Political and economic uncertainty can put investors on edge, with many selling their assets when things are looking grim. Then again, nobody can give exact estimations of market movements. One thing’s for sure, joining the bandwagon won’t benefit you in the long run since markets can bounce back anytime. For this reason, it’s still best to hold on to your investments while you wait for the dust to settle.
  2. Go slow
    An economic slowdown shouldn’t give you a free pass to invest in assets you think are gaining ground. As you diversify your wealth-building options , you will want to spread the risk around gradually. In other words, you should avoid putting all your cash in a single basket as this places you at a greater risk of losing a great deal of capital. Instead, you will want to invest in trickles. This allows you to respond to market fluctuations without increasing capital exposure.
  3. Rebalance your portfolio
    A good strategy you use in times of high volatility is portfolio rebalancing. This involves reinvesting the income you gained from high-performing assets into other asset classes that will potentially grow in value. On top of that, rebalancing helps you review the funds you currently possess and reallocate your investments so as to reduce exposure. You will be able to gain decent returns even as markets take a dip.
  4. Find companies you are familiar with
    The COVID-19 crisis has severely impacted the travel and hospitality industries, forcing investors in these sectors to migrate to tech, retail (particularly e-commerce), and logistics. Even so, you wouldn’t want to invest in industries you are not familiar with just because they posted record growth. It’s still best to seek out companies in emerging markets that you know a lot of instead of joining the bandwagon.

While the world waits for a vaccine to combat the COVID-19 pandemic, investors can still find ways to make money. It’s only a matter of taking action and making calculated decisions.

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