Investments are always risky, which is what puts many traders off. In addition, you’ll find many options to invest in, ranging from stocks, businesses, property and cryptocurrency. The question is, however, is there an ideal time to invest? What’s more is that the coronavirus pandemic may be seen as the opportune time to invest and add more funds to your savings. At the start of the pandemic, the S&P 500 went down by nearly 31%, catching the eye of many.
Before you invest
The time may be showcasing itself as a great investing opportunity, but it’s not that simple – you’ve still got to keep your guard to avoid any disappointments. Before discussing investments during pandemics, there are some factors which you should consider before making any decisions. Irrelevant of the time, your decision on whether to invest or not should depend on a series of questions that you should ask yourself before. Do you have the extra money? If not, investing isn’t the best idea at the moment. You need to ensure that the investment will help secure a better financial future but not worsen your current life. Sure, you can think about taking loans, but in volatile markets, borrowing money isn’t very feasible. If you’re looking to invest in stocks, then you should know that that investment isn’t for a couple of months, but years. Therefore, do not consider such investments as the answer to any immediate expenses you may have. Rushing to take a decision could create more problems or create financial burdens: a bad investment decision. The pandemic has financially challenged many families, thus, assess your current financial position before making any decision. Ask yourself if you can better spend that money somewhere else. Are there any loans that are still not paid back or any major repairs that need to be done? If yes, don’t make any investments now, but wait.
As soon as the coronavirus pandemic started to spread and countries began to impose lockdowns, people ended up traveling less and working from home, resulting in them having ample time on their hands – and time to think about investments. The ironic bit is that despite there being a lot of economic uncertainty, people’s investment habits increased. Moreover, studies have also showed that a large number also started to save, which raises the question – what’s more reasonable during a pandemic? To save or to invest? If you’re that committed to investing but you want to be on the safe side, you may want to start by setting up an emergency fund. An emergency fund could be described as the backbone of steady personal financial plan. It is all the money that has been saved in a separate account, set aside for an emergency. This is to ensure a secure future for you and your family – and is an alternative to borrowing money from family or friends or depending on your bank account’s overdraft. The amount of the fund not clear – it’s up to you on how much you want to put into the fund, but experts suggest that if there are two people with a good, stable income, a three-month emergency fund from each member would suffice.
Investing during a pandemic has to be more thought out. Why? Because of the higher risk that you or any other family could lose their job. Moreover, keep in mind that the stock market is affected as well by the ongoing global situations. Other than the global status, the stock market is also impacted by our fears and expectations of the future. Hence, a pandemic may not be the safest or most secure period of time for you to invest. COVID-19 saw the market go up and down – as the public was sent into lockdown, then confidence grew and later sent back into lockdown. To get a rough idea, the FTSE 100 fell 14% in 2020. So how has the market survived? People kept investing, despite the insecurity. What’s more is that traders were more inclined towards single-stock options, stocks which are easily bought and sold again. Despite there still being a risk, such stock options give traders a bit more certainty. Since last year, the S&P 500 and the Dow Jones increased by 72%.
One particular market that’s caught the eyes of a number of investors was the gig economy – especially Deliveroo. With people indoors and the tourism industry impacted, companies like Deliveroo could thrive. Their workers will easily keep their jobs and deliver your food orders from your favourite restaurants. This way, you’re enjoying yourself and staying safe. The company was also considering making £50m-worth of shares available to private investors – offered to those who have the app downloaded. As good as the opportunity sounds, don’t haste – although its revenues added 54% to £1.2bn last year, Deliveroo made a loss of £223m – when their sales were at their best. This doesn’t mean that buying Deliveroo shares isn’t a good idea, but that there’s still a risk present. Nothing is guaranteed.
With the first quarter of 2021 already passed, you could start getting a feel of the market. It’s essential to keep informed – the stock market is affected by the latest happenings. Currently, the new strains of the coronavirus are having an impact on the market, as well as the unemployment figures and inflation. However, there’s also the bright side which could boost the market again: the vaccine roll-out, the re-opening of the industries that were closed and the low interest rates. Research has routinely shown that time in the market is more successful than timing the market so I would caution investors against trying to pre-empt any potential falls,” independent financial expert, Claire Walsh said.