COVID-19 and Your Investments

By Mark Metzler posted 08-05-2020 01:20 AM

  

The middle of a raging pandemic might seem like an odd time to be discussing investments, with most people assuming it is not a time to invest, preferring to hold onto their money. 

With much of the economy slowly recovering from lockdown, and parts of it about to go back into restricted operations due to a second wave of infections, the outlook is rather grim.

In this pandemic’s initial stages, stocks took a turn for the worse. However, they have shown significant improvement of late, indicating that this is as good a time to invest as any. After all, everyone wants to grow their money, plan a retirement, and pay for their children’s education. Here are some investment guidelines:

Your 401(k)

If there has ever been a need to beef up retirement savings, this is it. Accomplish this goal by contributing to your 401(k). Of course, this is predicated on the assumption that you still have a job. Set a contribution amount, and it will go off your paycheck each month. Increase the contribution amount as often as possible.

Your aim should be to equal the employer’s contribution, even if you can only do so with gradual increases. Bear in mind that there are tax breaks associated with adding to a 401(k), and that a tax refund would be most welcome at this time.

Stocks

Never invest everything in the stock market as it can be volatile. However, there is money to be made for those investors willing to take some risks. There is no need to go into a stock market investment blind as the Motley Fool Review on TheStockDork.com is the perfect guide that provides advice and tips on following the investment research firm.

Find out about company risk profiles and how to make sound stock picks by doing a little experimentation before committing a lot of money to stock market investments. It is a learning process, according to experts.

Bonds

Putting some of your money into bonds is an ideal way to cushion the blow from a stock market loss. They also provide a steady income for investors. Bonds are sold as long-term, intermediate-term, and short-term investments. Experts caution against long-term bonds as investors could lose money should interest rates rise, and bond prices fall due to inflation.

Short-term and intermediate-term bonds safer options as there is a reduced risk of losing money from interest rate and inflation volatility. Speak to a financial adviser to find out more about bonds as an investment option. 

They work well as part of a portfolio but should not form its entirety. For a saying that best encapsulates the function of bonds, think of slow and steady wins the race from the Tortoise and the Hare fable.

Get help

Few investors are market experts who understand the inner workings of the economy. Most are navigating a world where there is so much jargon that it becomes overwhelming. All they want to do is ensure they invest wisely and profit from their investments. Instead, they give up before they even begin because of the confusion and technicalities.

People who make money from investments generally do not do so on their own. Instead, they have a trusted financial adviser who helps with financial planning and investments. The financial adviser has the knowledge and experience at their fingertips and can easily suggest appropriate investments to suit a client’s needs. 

They also know how to diversify investments to protect your capital. Diversification is the equivalent of not having all your eggs in one basket. A diversified portfolio is far more likely to generate a long-term profit than one that is too homogenous.

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