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Summary
- Follow the golden rule of investment - diversification of portfolio.
- Investors must focus on the company’s fundamentals rather than just stock price trends.
- One should know one’s risk appetite and take informed investment decisions accordingly.
The emergence of COVID-19 is one of the most unparalleled events in recent times. Inspite of the tremendous growth on the healthcare and technological fronts, scientists across the globe are working tirelessly 24X7 to contain the ghastly virus and find the solution to curb the spread, but not much success has been achieved on this front. Even the vaccines invested are not 100% effective, and do not guarantee to curb the virus even after a person gets jabs.
While some countries are successful in controlling the spread of the virus, others are struggling and finding it hard to contain the second and third waves of the deadly virus. NZ has largely stayed in a better position than other countries due to its hard and early lockdown.
The markets and economy were hit severely due to the lockdown adopted to curb the spread of COVID-19. Amid this volatile environment, it calls for a reassessment of one’s investment ideology and convictions.
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Source: Copyright © 2021 Kalkine Media Pty Ltd
With this background, let us look at top 5 investment tips for NZ investors to keep in mind during the ongoing pandemic and rake in the moolah.
- Diversify your Portfolio
During these uncertain times, it is advisable for all investors and financial planners to invest in divergent and variegated types of stocks so as to reap maximum profits. One should invest in an array of stocks pertaining to different sectors and industries, thereby reducing the risks, and enhancing the benefits of a diversified portfolio.
- Pick Companies, Not Stocks
While making one’s investment decision, it is always recommended to study the company's business model, its operating policies, and managerial board, besides its financial performances over a period of time, i.e. one should invest while taking into consideration the company’s overall fundamentals rather than just looking at the stock price trends.
- Avoidance of Trading Overactivity
It is seen that, at times, investors go for aggressive buying and selling based on certain market speculations.
One should not go for panic trading and should keep a close watch on the scoreboard and must analyse what triggered the sharp changes in the stock prices before investing in a particular stock.
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- Know Your Risk Tolerance
One should know one’s risk appetite and invest accordingly. This means that the risk tolerance of a particular shareholder largely depends on his financial stability i.e. the amount of money he can invest in stocks and the age factor.
Also, risk tolerance helps the investors bear losses to a great extent under circumstances when a particular stock performs poorly.
- Making Informed Decisions
It is always advisable to study the market trends and invest judiciously. One should make informed decisions after evaluating the scoreboard and the reasons behind the fluctuations rather than just blindly following the market speculations.
This would help in avoidance of investing gaffe and making market bloopers.
