A year and a half into the pandemic, and we’re still feeling COVID-19’s effects on the stock market and our finances. A lot of businesses — huge corporations and SMEs — are still reeling from their losses in 2020. As the pandemic continues to loom over us with no near end in sight, especially with the new Delta variant, how sound a move is investing during a pandemic?
Things to Remember When Investing During a Pandemic
While the financial sector took huge hits last year, investing in a pandemic could still work for you. You need to remember the following when considering investments at this time:
Emergency funds to the rescue
If there’s one valuable financial lesson we all learned during COVID-19 is this: emergency funds are important. Those who had emergency funds and savings in place weren’t as stressed as those who didn’t, and by that, we mean roughly half of all Americans.
Tech is king
With physical distancing set in place, remote work is no longer an option but necessary for companies to survive. While we were on the road to digitalization, the pandemic sped things up. At this point, we’re all highly dependent on all things tech.
Buy and hold as much as possible
When things go haywire, sometimes the best thing to do is nothing. As long as you find high-quality companies to invest in, holding onto them and riding this pandemic out will reward you with good returns in the long run.
Now is the best time to invest
As they say, the best time to invest is yesterday. The second best time is now. Understandably, potential and first-time investors prefer to wait for a more opportune time to invest. But the longer you wait, the farther the ship has already sailed.
The Best Things to Invest in During a Pandemic
Despite the temporary cease in business operations, business and trade never stopped. They just took on a new route. By taking the present circumstances and the new normal into consideration, one can still make sound investments at this time. The question now is, where should you put your money? Do you invest in a stock, REIT, or cryptocurrency? Knowing where to invest is as crucial as knowing what to do at this time.
Residential rental properties
Surprisingly, residential rental properties have grown in demand over the past year. More folks are now opting to live in single-family homes in the suburbs instead of small apartments in the city.
Despite the disruption in the supply chain, the demand for food and agricultural commodities remains constant and stable. Consider looking into farming equities, farming mutual funds, and REITs.
Inverse real estate ETFs
Real Estate Investment Trusts, or REITs, allow individuals to invest in real estate properties without the need to be hands-on at buying or managing any property. With the current state of the economy now, commercial real estate is not a lucrative option for investors. Betting against it can be done via Inverse Real Estate ETFs.
Banks and accounts insured by the FDIC
The Federal Deposit Insurance Corporation, or FDIC, ensures public confidence in the nation’s financial system by maintaining stability in the economic sector. It would be wise for any person with a substantial amount of money not to put their eggs in one basket. Instead, they should spread them out in different FDIC-insured banks and accounts.
A good amount of cash at home
Remember the Great Recession in 2008 and how banks were this close to freezing all accounts? That’s the closest thing we have to this pandemic now. If banks suddenly decided to freeze accounts across the board, this will leave people no access to their money. Having a good amount of cash on hand (at least ten percent of your total net worth) will give you some peace of mind.
Gold and silver
Precious metals like gold and silver historically go up in value when almost everything else declines in value. Investing at least ten percent of your net worth in physical gold acts as additional insurance against other financial losses at this time.
Pay off your own home
If you have enough cash to your name even after you pay off your entire mortgage, go for it. Doing away with the three percent interest will be totally worth it. But only do this if you have enough cash to go around and won’t compromise your other priorities, especially during these uncertain times.
Even before the pandemic, investing has always been a game of gamble. The pandemic somehow just magnified the risks involved in it. The bottom line is if you’re intent on investing now, be well-informed before making any decisions.