Covid-19 Hits Markets: Know The Best Investment Options For Your Portfolio!
Outspread of Corona Virus has hit the markets across the globe, making investment riskier. Addressing the best investment options, therefore, has to be the first step of your latest investment strategy.
There are several speculations of the global economy going down further. In fact – however pessimist it sounds – this Covid-19 led recession can last for a long time. This no way means you have to bear with the anxiety of watching your portfolio touch the rock bottom. Instead, it’s time to be more strategic than you were ever before. Here are the best investment options that can help you in realizing this goal.
1. Focus on long-run investment plans:
If we consider historical data on the impact of epidemics on stock markets, most of them are noticed to last from 2 to 5 months. So, in case of corona pandemic also, it is reasonable to expect that the market will get over the dropdowns in next two quarters. This implies a smart marketer will save some cash for next few months’ expenses and put some in long-term investment.
2. Dollar-cost averaging:
By dollar-cost averaging, we mean buying a share of the same company over a period of time. Investing gradually in a stock allows you to buy more units when price is low and less when price rises. This way, we can optimize your total return from the investment.
3. Diversify but do not overkill:
If you don’t want the corona led turmoil to doom your investment return, diversification has to be your top priority now. Lookout for mid-cap funds that often perform well in long-run and yield a good return. ETFs or the exchange-traded funds can be a great tool to diversify your portfolio, as it allows exposure to an extensive range of stocks.
However, the market has gone down drastically and don’t let the fall in share price lure you. Think about the possibility of further correction when selecting investment products. For instance, the price war between Russia and Saudi Arabia on crude oil has brought in additional turmoil in the market. This can put many big corporations’ performance on risk. It is crucial to identify and analyze the prospects to determine the best investment options available to you.
4. Identify the attractive sectors:
Identifying the attractive segments and investing there can save you from living in anxiety of losing your money. The easiest and most consistent way of doing this is staying updated and analyzing potential impact. For instance, reduction in crude oil price will benefit the firms use crude oils as a means of production. So, they are expected to get over the pressure caused by corona outspread quicker than many other performers.
As India is an oil-importing country, many firms that use crude oil as raw material will enjoy a reduction in production cost. This makes these Indian firms better off than their international counterparts. For investors, this can be an essential observation to determine investment products.
Besides, amid the turmoil caused by the outbreak of Covid-19, few sectors such as pharma and FMCG are expected to face lesser impacts. Focus on investing in these sectors.
5. Balance your risk appetite:
In this time of crisis, it is quite impossible even for the analysts to ascertain how harsh the impact of this corona led recession will be. Therefore, it is crucial to put your purchase tendency in check. Any adventurous move should not drive your investment decision; instead, each step should be made with proper clarity on ROI and risk associated with it.
To put together the best investment options in current context, our suggestion would be staying calm and seeking clarity before making an investment decision. Don’t let the falling price control your investment decision entirely. Furthermore, this is not the time to panic either. If the falling price of your investment products makes you bite your nails in anxiety, take a deep breath and relax. It too shall pass!