Investology

Smarter Investing During The Pandemic

Investing may seem like far from most people’s minds especially during tough times. But for investors who have been into it for many years, it is still the same as usual. Investing should not be something that should stop just because there is a pandemic. Of course, there are some changes to consider as well as a general downturn to expect. A savvy investor only needs to become smarter during such instances. Here are some tips to consider.

Don’t just sell because the market is tanking.

Investing and the market can be compared to riding on a roller coaster. A smart investor knows that the market operates in cycles and may not stay at a consistent position at all times. There are many investors who may think of only selling when the market is down. Just like a roller coaster, it can be scary when the market is on its way down. But jumping off of a roller coaster prematurely can be very dangerous. You are safer to try and ride it out. If you hang in there, you will be able to see through it when the market starts to recover. 

Consider Index Funds

In a market downturn, such as what we currently experience in this pandemic, investment options may be somewhat stagnant. Most are trying to wait out a bit longer before making that major decision to trade. In such cases, a smart investor may consider looking into passive investments such as an index fund. An index fund basically is a list of stocks chosen not based whether they are winners or losers. The stocks are mostly chosen for their overall value and can be passively managed. The benefit is that investing in index funds comes with low annual fees. The lower costs but with positions in many stocks will make the investment worthwhile during tough times.

Rebalance And Diversify

With the changing times, a smart investor also needs to evaluate one’s general position and determine the changes needed to keep up with current times. It is important to try and rebalance your portfolio at least once a year to keep up with the market and where it may be headed. But at the same time, you should always bear in mind to diversify in order to spread out your investment risks. That way, your portfolio will not be seriously affected as a result of severe market downturns in certain investment areas, especially during a pandemic. 

Tags: smart investing