Where To Put Your Investments During the COVID-19 Situation
We all know the impact the COVID-19 virus has done to the global markets. Stock markets have crashed all over the place.
If you have the cash available, this may be the best time to buy due to the situation presented by the pandemic.
Many stocks are now priced lower than they have ever been, and this may be your golden opportunity to invest wisely.
You can profit in the longterm if you invest your cash smartly during the stock market meltdown.
Here are steps you can take when you decide to invest your cash right now:
Invest in Short Term Financial Security
As an investor, the first thing that you should do is to secure your short term financial security. Gather funds that can cover at least three months to 6 months of expenses.
The coronavirus situation has made an emergency fund more critical than ever. Many companies have closed down, and more job cuts may be on the way.
If you think that your job is secure, it is better to be cautious than reckless with your spending.
You should not invest your emergency funds in stocks. Expect plenty of volatility in the coming weeks and months to come.
You are better off with parking your cash for emergencies in money market accounts or savings accounts with high-interest rates.
Invest Slowly Over Time
Once you have secured your emergency funds, you can now start investing your cash in stocks incrementally over time.
You don’t just put all your eggs in one basket. Avoid the temptation to go all out now with your spending because you are not sure what will happen to the stock market in the near future.
It is better to invest little by little until you grow your portfolio of best buys during the pandemic.
Some investors pull the trigger and invest all their cash right now, but there is no way to predict what will happen to the market in the short term.
What if the bear market gets worse before it gets better?
Here in the US, we are still weeks away from reaching the peak number of COVID-19 cases. As the number of cases continues to rise, many investors may become anxious.
Stock prices may be attractive at the current levels, but going all in at once may be costly in the long run.
Invest with the Long Term in Mind
It is always wise to keep the long term in mind when investing in stocks. It may be true that many companies will face difficulties within the course of the year, but keep in mind that only the strongest companies will survive and thrive after the pandemic.
This means that just because a stock is rising right now, you should go all in and buy. If you feel like the rise is only temporary due to investors piling up into some stocks, then it would be wise to invest elsewhere.
Choose companies that will grow even when the crisis is over.
Netflix as a Good Stock Pick
The COVID-19 lockdown efforts have made home entertainment a centerpiece, and companies like Netflix have stepped up to meet the increasing demand.
The stock has risen 5% in the past three months, and many investors feel that investing in the video streaming giant is a safe bet for constant growth as people all across the world binge on home entertainment during the lockdown.
In any economic crisis, the low priced Netflix subscription fees are attractive enough to fit the budget of cost-cutting Americans.
The leader in streaming entertainment has 167 million paid subscribers at the end of 2019 and experienced a 28% increase in revenue.
Hotspots like Hong Kong and South Korea have shot up. Downloads from South Korea have grown by 33%, while Hong Kong has doubled since the start of the year.
Take note of Netflix’s quarterly results, which are due on April 21, and see how the coronavirus situation has impacted the company’s unprecedented growth.
Conclusion
Plenty of stocks are on sale during this COVID-19 period, but the best buys are found with companies that will continue to grow even when the crisis blows over.
A company may be experiencing growth during the crisis, but it may only last while the lockdown is in effect.
Be wary of companies that have insufficient cash on hand and substantial long term debts. These red flags should not be disregarded if you want to make the most out of your stock investing during the COVID-19 crisis.
