When it comes to investing our money we have to be incredibly careful with what we do and when. Everything comes down to timing when investing in the stock market and requires some know-how into how the market works, this is vital if you are going to invest in anything or you might as well be throwing your money down the drain. If you’re currently an investor you will know that during COVID-19 your stock prices have most probably plummeted meaning they’re at a low point and will continue to fall for a while, but we’ve been through enough world disasters to know that the economy will pick up again and those sitting in the right seat will make money from it, the question is are you in the right seat?
Cash Management
First things first, before even thinking about investing any kind of money into any stocks, shares, or schemes, we need to ensure that we have complete control over our money. This means we know how much money is coming in and out each month. It’s also good to be aware of how much money you spend in each category, for example, $200 on groceries and $150 on entertainment each month on top of your mortgage and bills. If you’re old school, then you’ve probably got a spreadsheet or a money journal to help keep track of your spending, but there are much easier and more accessible ways in this day and age to do the same thing. Hybrid, or smart accounts, have been designed to help us manage our money properly all from the comfort and convenience of our smartphones. There are a few around so it’s worth reading up on them to see which will suit you best. If you’re looking for somewhere to start, then this review might help since it lays out the basics of what you need to know about cash management accounts. Having one of these accounts can help you sort out your finances and you’ll find yourself in a much better situation having full control over your money.
Bear Market
Currently, we are in a situation known as a bear market. This is a general decline in the stock market over a period of time, which includes a transition from optimistic investors to that of general fear. Another way that the term bear market is accepted is when the price declines by 20% over a 2-month period. There are ways to survive the bear market and that’s by buying in stocks dip in price, this means the stock you have been looking at or researching is at the lowest price of the market fall until it starts to rise again. If you can time your investment well and buy during the dip, then you’re set to make money. The risk in a bear market is you don’t know when it’s going to hit the lowest price point and start to rebound. The last situation similar to this was the 2007-2009 bear market and it was here that we learned that investing in a certain way would be hugely beneficial. Buying index funds a little at a time through your 401k (a company-sponsored retirement account that allows employees to contribute) will end up rewarding you with a profit on your investment when the market returns to normal and starts to rise. The only thing is that you have to sit tight, over half of those that used their 401k’s last time lost over half of their investment due to being impatient, those that hung on profited greatly. The risk is we never know when it’s going to end, and we will most probably profit many years after it finishes.
Should I Invest?
This is completely dependant on if you’re financially stable enough to do so, investing during a time of pandemic is an unstable one at best. Businesses aren’t able to run as usual which affects investment, if they aren’t able to grow then there’s no way they can increase their price. We can, of course, buy-in and sit tight and wait for all of this to blow over which could end with you receiving a tidy profit, but it’s worth remembering that this situation is different from one we have ever had as a human race. So if an investment is on the mind, make sure you’re financially able to do so and have enough knowledge to get you through.
With these things in mind, understanding if the world is ready to invest again comes with a can of worms to be opened. We have never been in this situation so everything we do has to be approached with caution and care, making the wrong decision now could end us having to file for bankruptcy in the most financially difficult time of this generation, but making the right one could set ourselves up forever. Always make sure you’ve done as much research as possible before committing to investment and seek professional help if you need to, your money is important.
