The COVID-19 crisis made people rethink their finances. Many realized the importance of having an emergency fund. Others learned the hard way that having a single income stream is never enough. Some started investing during these turbulent times. But is the pandemic a great time to start investing your hard-earned cash or is it wiser to wait for the economy to recover?
How to Decide Between Saving and Investing First
People have good reasons to invest while the economy is in recession. Of course, it will all depend on your current financial situation. If you already have enough money saved up for financial emergencies and your current financial goals are leaning more towards the long term, then you might want to start investing. But if you need the money asap and can’t stand the idea of risking your cash, then you might want to save up first.
Another reason to invest during the pandemic-induced recession is to take advantage of the easy to access markets while we spend more time indoors. According to news, Forex Trading alone experienced massive growth of 300% during the second quarter of 2020. As it turns out, many people are leveraging on Foreign Exchange’s low transaction costs to make up for their lost income. Many are also turning to forex brokers for U.S. clients to enjoy better trading conditions and more freedom over their accounts.
What to Consider If You Are to Invest in the Time of the Pandemic?
For starters, every newbie investor should educate themselves on how the pandemic will influence different industries. Keep in mind that during these challenging times, some industries are more negatively affected than the rest like the travel and sports industry. Some industries benefited from the pandemic, like the healthcare industry, online learning, and collaboration technology. Understand each industry’s potential before you invest. It would be better to risk your investment in companies that can overcome the recession.
If you ask Warren Buffet, he prefers stocks over bonds. This is since high-quality stocks will always do better than real estate, bonds, and other commodities or assets compared in the long run. Know that the current stock market crash is an excellent opportunity especially for newbie investors. As long as you think long-term, then you have bigger chances of winning in the stock market.
Another thing worth keeping in mind is to avoid being hasty. You may have certain investments now that seems to lose its value over time. Before you start panic selling, take a moment to breathe, analyze the situation, and review your options. Don’t let your emotions influence your investing decisions. Try to be patient and don’t let negativity cloud your judgment.
Last but not the least, keep yourself informed of the latest news. Only rely on trusted resources and keep your eye out on the financial market. The better informed you are, the better your chances of making good decisions concerning your investment practices.
Investing is nowhere easy considering you are putting your money on the line. But if you want a faster way to boost your wealth in the future, then this can be the best option. Think about your finances, assess your current financial situation, and take into consideration the more important things before investing during these difficult times.