Amidst this trying time, every sector and industry have their strategies and plans on how to appropriately respond to the COVID-19 crisis, most notably because the pandemic is significantly affecting the financial status of institutions and businesses.
Since significant operations in the world are directly impacted, a considerable percentage of workers are forced to find ways to make extra money (for those who are granted a work-from-home policy by their employers). On the other hand, others—particularly those who are temporarily on a “no work, no pay” system—are looking for other means of income.
During this trying time, one of the most popular money-making and asset preservation methods is through engaging in investments. An investment is referred to as “an asset or item acquired with the goal of generating income or appreciation.”
Whether you are working from home, currently looking for income-generating opportunities, or scouting for a long-term wealth preservation method, read ahead as we’ve listed some reasons why engaging in investments is among the best options for you during this critical period:
1. Saving Money for the Long Term
On the economic side, investment is referred to as “the purchase of goods that are not consumed today but are used in the future to create wealth.” The COVID-19 pandemic is considerably affecting the financial markets, making significant declines. While this might sound painful for other investors who are hoping for spikes in the market charts, this might be a good time for aspiring investors to enter the market and buy stocks for long-term savings.
The stock market can still experience extreme volatility this year, so earning profit solely by buying and selling—while not impossible—might not be recommended for those who want to make money swiftly. Ideally, this “long-term” is around three to five years. This way, you can hold on to your stocks until the market recovers.
2. Protecting Money Against Inflation
Government-issued money or fiat currencies are also experiencing price fluctuations during the pandemic, and many people are finding ways to spare their funds from the recent price movements. One of the most popular methods to do it is through investing in various assets and commodities, as these have always been considered as a good option for preserving wealth.
Among the most popular commodities are gold and silver, as these precious metals are believed to store value throughout history excellently.
Petroleum or oil is also considered an option for backing up value. However, recent reports from the World Economic Forum say that “Oil companies are having to halt production and may even need to destroy their product just to get by,” as “Onshore oil storage worldwide is now roughly 85% full.”
As for digital assets, bitcoin (BTC) is deemed a good means for preserving wealth because it has a limited supply—21 million BTC—which makes it a scarce asset. This means that as more and more BTC are being mined, the supply also increases in value. Bitcoin also still stands as the dominant among the thousands of other cryptocurrencies for price and market capitalization, despite the extreme price dips since the global lock down.
3. Reserving Cash for Emergencies
Let’s admit it; some situations in our life happen unexpectedly. Those events we even wish won’t take place—getting involved in accidents, someone from the family getting sick, unprecedented resignation or termination from a job, or possible recession during this COVID-19 pandemic, to name some. When such instances happen, having an emergency fund will surely help you not to spend money outside your fixed or planned budget.
A lot of people are probably without income or savings at this time. Some might still have but are spending them on food and other necessities during this pandemic. However, for those who are working from home, are still getting their monthly compensation, and are capable of putting aside even small amounts from their income, this lock down period can be an excellent opportunity to save up money for an emergency fund.
An article from Wealth Fit states that having an emergency fund “prevents you from taking on high-interest debt during a stressful time when you have bills you cannot pay or a significant expense you weren’t expecting.”
Aside from protecting your funds against the potential risks of inflation, having reserved funds also gives you the ability to cover your expenses in the coming months, most notably if the crisis lasts longer than expected. Apart from that, properly managing your cash during this pandemic serves as your initial step towards financial independence.
4. Taking Advantage of the Market Price Dips
In the financial context, an investment is defined as “a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.” Currently, the stock prices of various commodities are experiencing intense volatility.
While it is hard to tell whether this is an excellent time to buy stocks or not, the occurrence of fluctuations is still deemed as an opportunity to engage in the market. However, as Warren Buffet says, “Be fearful when others are greedy and greedy when others are fearful.” This strategy can be rewarding, but it can also be a risky path to take as traders and investors are also trying to assess the market’s movements.
5. Exploring other Investment Strategies
Engaging in investments can be tedious and complicated in the beginning. However, you can take advantage of this lock down period to get yourself familiar with various strategies for either preserving your wealth through investments or growing it. As you explore more opportunities, you will eventually know which are the types of investments that are suitable for you, most importantly, in attaining your financial goals.
It is crucial to learn the ins and outs of the process and get the necessary tools that you think will be beneficial for you. Check the investment companies that you are dealing with and be equipped with other essential knowledge that you will need to yield remarkable results in your investment journey.
The COVID-19 pandemic is bringing a lot of “extremes” in the world today. In essence, extreme fear for every individual as the number of cases and mortality continues to rise amidst the enforcement of strict social distancing protocol.
There’s also a drastic change in global events as nearly every activity in the world is temporary—or for some, permanently—put on halt. And extreme market conditions as the performance of trades and price stock have incredibly changed since the start of the outbreak.
However, there are still a lot of things you can do to go along with these changes. Jump start your financial investment journey while scouting and exploring various income-generating opportunities while staying safe inside your home.