10 Investment Strategies to Survive the Economic Fallout from COVID-19
When the initial reports of a global virus outbreak started coming in, the world did anticipate an economic fallout as a by-product of the novel coronavirus disease. Now, with WHO officially declaring the outbreak as a pandemic, and over a month of nationwide lockdowns across geographies that impending financial crisis we were all worried about is already here.
The COVID-19 outbreak acted as a catalyst for global business shutdowns and financial market crashes immersing the world into another economic downturn after 2008.
Learning valuable lessons from the past, here are few strategies to salvage what’s left and to ensure that you make smart decisions while the world rides off the rough economic wave.
Acceptance and Denial
The first step to addressing any issue is acceptance. Staying in denial especially during a financial crisis won’t do any good to one. Next comes, the part of making money. If you want to make money during the fallout phase, then you also have to get accustomed to the fact that you have to miss out on the gains of the upturn. Investing fast can cause one to lose more money. Your main aim should be to time the allocation and assessment of all your assets so that when the tables turn, your risk exposure is a minimum.
It is hard to not panic, considering the whole health and economic downfall scenario that we are facing. However, panic leads to the worst decisions and now is not the time for that. When it comes to investments, you need to plan it out instead of making hasty decisions. If you already have a five-year investment plan, then recessions should be factored in your portfolio.
Invest in Gold
Gold prices never get affected by economic downturns, and if you go through the current market value then you will see that the pandemic has hardly had any down effect on the gold rates. In the case of gold, the returns are inversely proportional to the stocks and bonds returns. That’s why, when other major assets go low, gold keeps rising. There are two ways by which you can go ahead with your gold investment. You can either buy the largest gold ETF or you can buy gold in crypto form.
Invest in Cryptocurrency
Crypto was introduced to us for a time like the one we are facing in the present. While physical assets keep failing, the digital market remains afloat amidst the worst bear situations since 2008. If you haven’t given a thought about owning a Bitcoin or Altcoins, now might be a good time to give it some thought.
Invest in Stable Coins
Stable coins were introduced in the crypto space as a back-up plan for investors to ride out the market volatility. These digital assets are pegged with fiat and other assets to keep the price stable even in a bear market. Since traditional dollars cannot get you any returns, you can invest in stable coins, and profit from a substantial interest in your holdings.
Real Estate Investments
This is another reason to keep a cash reserve, In the 2008 recession, many people ending up losing their homes, the others had to sell for less than half the actual price. Property prices come crashing down when the economy collapses. If you have the money, then you can get yourself a good real estate deal. As soon as the market recovers, your real estate asset becomes a regular cash flow source.
Invest in the Right Stocks
Buying stocks have also proven to be a great strategy during slow times. It is highly unlikely for the stocks of a well-known company to go bad easily. However, you might get them at a better rate due to the crisis.
Plan for the Long-Term
Short term investment plans are likely to do you good in the present. Investors often fall prey to market fluctuations. They get all excited when the price suddenly surges and lose night’s sleep when the opposite happens. You need to remember here, that even during the recession, certain companies are sure to thrive, such as the ones offering FMCG products. In a medical crisis, the price of the pharma companies and ones related to medical goods will remain stable. So, don’t go for a panic sell-off. Now is the time to observe the market and take things slow, rather than fast-tracking your moves.
Invest in Commodity-based ETFs
Commodities have an inherent intrinsic value and one can expect the prices to not plummet. So, when they start to go low, it’s time to buy commodity-based ETFs, which has the potential of instant and good returns.
Take Calculated Risks
Most will advise you to play safe during a downturn and to stay away from risks. However, that is arguable. Even the market experts believe that downturns are the best time to take calculated risks. You can invest in an ETF, which goes up when the underlying market index hits the lows. It might be a short-term thing, but it works well.
On an ending note, we would like to quote the famous line; “Nothing lasts forever”. So, this too shall pass and the economy will recover because there is no other way out. Until then you have to prioritize your investment priorities and make smart, calculated decisions to prevent further financial loss.