7 Tips for a Smart Investor During the COVID-19 Pandemic - Kalkine Media

Summary

In response to the current COVID-19 crisis, this article provides inputs on how to manage your portfolio and provides a potential window of investment. It explains 7 tips that will help you to be a smart investor in the midst of the grim environment created due to COVID-19 pandemic. Most of all, maintaining a relaxed state of mind is important. Making sure you do not take unwarranted steps without proper knowledge. Note that market mechanisms are often unpredictable, and investments always entail risk.

The coronavirus outbreak has sparked several uncertainties and volatility in markets across both domestic, as well as global markets. If you have been following the market news, lately, you might be hesitating and scared to invest since the future does not envisage a booming economy.

There are ways you can mitigate your loss or provide an opportunity to secure a good market share. Online stores are one of the avenues that have done well in these times, as you can get everything you need at Thrive Market and other online markets with delivery services. If you are worried as an investor about investments opportunities, we bring to you 7 tips to consider and make smart moves and decisions as an investor.

Being Intelligent in Diversification

Diversifying the existing investment will enable an investor mitigate volatility and decrease the uncertainty of the price fluctuations of an asset. Keep in mind that a diversified portfolio means taking less risk.

Basically, diversification will give you the ability to optimise returns by investing in different sectors by distributing your holdings to different asset groups, such as equity shares, mutual funds, bonds, cash securities, precious metals and derivatives, which will act better in the same situation. It is the most significant part of maintaining stability while reducing losses.

Long term Investment Vision

During times like this, once your portfolio is diverse there is a sense of stability and assurance, however, your investments are grouped as short term or long term. Long-term investment creates wealth, whereas short term preserves your capital.

Despite the recent slump and losses in market shares, such crises are not new. The COVID-19 period will have an impact, but the degree to which it will impact you gets determined by whether you decide to stay invested or get out.

But if you're an investor with a long-term vision, as time goes by, you will have huge returns. An investor with short term vision who gets out after a bad year, chances are that he/she may face loss.

When countries are going through such a recession, the ones that will thrive will be businesses with strong foundations. Hence, investors must consider investing in such businesses after carefully examining the market security.

Consider Investment in Precious Metal

COVID-19 and the economic lockdown has led to a contraction of economies and stocks, globally. In the midst of all of these, gold has appeared as a safe bet for investors around the world. Gold prices have managed to surpass the all-time highs. Gold price currently in Australia is 2635 Australian dollars per ounce.

Why invest in gold?

Gold possesses inflation-beating capacity, it also has high liquidity power.

There are various gold investment products such as Gold exchange-traded funds (ETF), Sovereign Gold Bonds (SGB) among others, which can allow you to diversify your investment portfolio.

We would advise you to look for the long-run returns. It is expected that gold will get stronger in the market. So, if you make an investment and buy on correct dips, you are guaranteed to gain profit in the long-term.

Tech Market poised to be the Future

We have seen a drastic change in the role of technology in the lives of people, in terms of our lifestyle, work, shopping and interaction since the COVID-19 outbreak. With everything going digital and virtuel, it may seem to be a new norm in the longer run.

Investing in the tech world may also be a smart investment, as the tech industry dominates the stock markets and continues to expand as a result of the digital transformation. Tech areas like AI (artificial intelligence) and machine learning, data analytics, e-commerce, cybersecurity, and cloud computing look promising for growth in the coming years.

Opting for Cryptocurrency

In response to social distancing norms and other regulations resulting due to the fear of COVID-19, there is a shift to a more contactless cashless form of transaction. Cryptocurrency had already been gaining ground and investors were pouring in before COVID-19. The pandemic perhaps is acting as the catalyst easing the nervousness around cryptocurrency.

During July, the United Nations Children’s Fund (UNICEF) in their fight against the adverse effects of COVID-19, have extended utilisation of cryptocurrency in response to the demands of donors and companies.

Why invest here? Worldwide, governments are taking bold steps to regulate it and make it smoother to buy/sell/hold a cryptocurrency. Moreover, Cryptocurrency might just be the next e-gold.

Switch off the Noise

There is an overflow of information floating around in the modern age of social media. Keenly scan for what government census and financial pundits are predicting from authentic reliable sources.

It is significant to reduce the noise on the information flow enveloping investment markets so that you can concentrate. Beware of the rollercoaster ride if you are planning to invest in stocks that are rising on a daily basis. The problem for most individuals is that inevitably someone who wants to buy can do so and then the only path is down.

So, if an investment looks sketchy, or is complicated, then it's important to refrain, hold on to what you perceive as of now.

Avoid Panic

During this uncertain time when the stocks are crashing, it is advised not to panic, and more importantly not to act out in fear. Ideally, there need be no change in long-term equity investments; historical data shows that market shares are always rising, likewise, this slump is a short-term crisis and manageable.

Having an awareness of the dynamics of the markets is a good characteristic of a wise investor. He/She attempts to find another way to navigate in times of uncertainty. The best solution to market volatility is to avoid sell off investments, and rather rebalance the portfolio to safeguard long-term targets. Using the support of a financial advisor is important if you are concerned about your current holdings.

Not all the sectors in the economy have been equally affected during COVID-19 pandemic, there are ways you can invest or shuffle your investment. The tips discussed in the article could help you become a smart investor in the current scenario.

Author Bio

Arpit Mathews teaches Theology and Philosophy. He loves to write blogs and articles and has an experience of over 5 years of writing for numerous blog sites on various topics including diet and health, travel, and smart-home technology.