Coronavirus and investments: how to make money during falling markets
Pandemic COVID-19 led to chaos in world markets, causing daily fluctuations and making it difficult to find a safe place for your money, reports CNBC.
The S&P 500 lost a fifth of its value during the first quarter of the year, this is its biggest loss since the global financial crisis.
Now it’s more important than ever to have a cash buffer, especially if you are faced with difficult times, such as a fall in employment in the coming months.
Many people think where to invest in order to make a profit.
On the subject: 11 ways to improve your financial situation during a crisis
At the moment, investors disagree. For some, signed on Friday, March 27, the US bill to stimulate the economy in the amount of $ 2,2 trillion means positive changes in the market. Meanwhile, others believe that the economy will continue to fall.
CNBC Make It financial experts have expressed different opinions: comments ranged from worried to cautiously optimistic. Freddy Lim, Investment Director, Digital Assets Manager at StashAway, said current data indicate a short-term market crash. While Samuel Ree, director of investment at Digital Financial Advisory Endowus, says that much more depends on the US political response.
However, they were unanimous that now is a good time to capitalize on investment opportunities.
“The ability to get profit in the long run is usually born under these dire circumstances. This opportunity occurs every ten years, ”said Rea.
For those who already have interests in the market, this means that you need to keep yourself in control and continue to contribute. For those who are outside the market, this means that you need to start purchasing until assets have fallen in price.
As the situation showed during the recent major economic downturns, the global financial crisis, those investors who continued to invest in the S&P 500 received a double return compared to those who switched to cash only three months before the recovery, according to Syfe and CBOE .
Although there are no economic factors that triggered the GFC in the current recession, CEO Dhruv Arora said the data underscores the benefits of maintaining long-term investment.
“No one knows for sure when we will bottom out in the current environment, but we believe keeping the investment will pay off,” Arora said, advocating for a diversified portfolio of stocks, bonds and other asset classes.
While stocks have fallen in recent weeks amid the uncertainty caused by coronavirus, CNBC Make It consultants agreed that they remain attractive for investment. Moreover, many of them are now sold below their true value.
Steve Bryce, chief investment strategist at Standard Chartered Private Bank, agreed that with the advent of the virus and containment measures such as increasing remote workers, stocks of technology and healthcare companies are likely to rise. But he warned that they had yet to fall.
“It is possible that there will be better buying times in the coming weeks as the crisis escalates,” Bryce said.
Bonds, or fixed-income assets, meanwhile look like an attractive defense against stock market volatility, advisers say. This is because the yield they offer is inversely related to interest rates. When interest rates fall, as was the case globally after several cuts in the central bank, bond yields rise.
“The sharp imbalance in the bond market and the monetary policy response has led to a reset, and the bond market looks like a good defended option for asset investment,” said Endowus' Rea.
Bryce agreed, highlighting the Asian dollar bonds and government bonds of developing countries in the US market as separate items.
In other cases, other assets, such as real estate and goods, can help diversify your portfolio.
Gold, in particular, may be a good choice, Ri said, since it provides a hedge against the US dollar. However, as a “zero-return asset class,” the allocation of funds for the precious metal should be small, he said.
For specific geographic regions, consultants noted that Asia, initially at the forefront of the outbreak, seems to be recovering first.
“In our view, the potential risks were already included in the price,” said Howe of DBS. "In particular, we consider the markets of China and Singapore to be valuable as they trade at the GFC level."
Despite this, many agreed that the United States would continue to remain attractive after gaining control of the stabilization fund's money.
Where to begin
Despite the fact that markets will remain unstable for some time, experts agreed: now is the best time to start investing.
One of the easiest entry ways for new investors may be to use digital asset management or passively managed index funds. At the same time, investors should focus on long-term goals, and not on pressing financial needs.
“The key is to start small, understand the level of risk, do due diligence and stay diversified,” said Evie Vee, head of financial planning and personal investments at DBS.
“We don't know how long the pandemic will last, so it would be wise to spread your finances over a longer period, rather than investing 100% of your money at one time,” she added. "Invest money you don't need in the short term, take a long term approach to gain an edge over time."
As reported by ForumDaily:
- A new virus was discovered in the Chinese city of Wuhan in December 2019. In 2020, it covered all continents except Antarctica. On March 11, US President Donald Trump imposed a ban on entering the United States from EU countries. The ban came into force on Friday, March 13, and will last at least 30 days. In particular, it will concern people who have visited the Schengen area over the past 14 days.
- March 13 Trump due to coronavirus introduced a nationwide emergency regime in the US.
- On March 11, WHO recognized the situation with the coronavirus pandemic, which covered more than 110 countries. Symptoms of Coronavirus COVID-19 Disease Available here.
- Virologist's tips on how to protect yourself from infection - link.
- Taking advantage of the panic in the society because of the epidemic, fraudsters came up with several schemes to deceive victims of personal data and money. The most common ones can be found here.
- Having succumbed to panic due to a state of emergency, Americans are massively buying toilet paperbut they cannot explain why they need it during the epidemic.
- Trump has signed into law on paid leave due to coronavirus. Who can count on paid leave, read here.
- Read all news about coronavirus in our special project.
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