Investing money is always a risky and volatile game, but could now be the best time to invest? Find out whether the coronavirus is a good start for new investors, here…
The coronavirus pandemic has led to, quite possibly, the biggest downturn in an economy in history. It’s been likened to that of the Global Market Crash in 2008, but some say it could become even worse than this!
During the pandemic, we’ve seen an erratic downturn in a number of sectors, including property, travel, and oil. This really left investors at a loss, reducing their investment value by around 30 percent less than it was a month prior. Other sectors have skyrocketed, including the health and wellbeing, and technology sectors, but what’s next?
Whether you’re looking into setting up an offshore hedge fund formation, you want to invest in stocks and shares, or you think investing in a particular sector is a good idea, you’re certainly onto something. Perhaps right now, during such a dip in the economy, assessing new investment opportunities is a wise choice. Discover more, here…
What’s the UK Economy Looking Like During the Coronavirus Pandemic?
In May 2020, the Bank of England has warned us all that we might be facing our worst economic downturn in 300 years! What once was a comparison to the crash in 2008 has now seemed to exceed it drastically. For anyone new to the stock market, here’s a little rundown of what this may cause in the UK…
Before the pandemic, markets were at an all-time high, what with the rising economy ever since 2008. With this relative security for investors, over a strong decade, what’s to come for investors might feel a lot worse than we initially predicted. Because the economy is contracting at the fastest rate since the crash over a decade ago, we simply cannot know what’s to come.
That’s not to say that we haven’t seen some ups too. With such a rapid crash also came troughs along the way, leaving some investments well worth the buck. For example, as we’ve seen, the technology sector saw a huge incline, what with everybody being stuck at home.
Clearly, it’s a game of watching and waiting for the right time to pounce…
The Drawbacks of Investing Money During Coronavirus
First and foremost, it’s worth mentioning that this sort of fragile state the stock market appears to be in is certainly not new. It’s always been volatile and unpredictable, but a huge global event like COVID-19 has simply exposed the raw nature of it all. Some say that, with a decade of growth, valuations have stretched to unsustainable levels, so we’re now seeing the worst of this now.
The Picture for Seasoned Investors
Naturally, for those who already have large investments stocks and shares, this pandemic won’t be pretty. With coronavirus disrupting supply and demand more than we’ve ever seen in our lifetimes, losses will, no doubt, be great. It’s also very evident that we haven’t seen the end of this downturn; things could get much worse.
For many of these scorned investors, hopes are high for the UK lockdown to be eased further. With the general public out and about again, retail stores could reopen and, eventually, the hospitality sector will re-establish itself.
That said, there’s no saying how long it will take for the economy to heal, especially considering lockdown will not ease completely for the foreseeable future. Clearly, this is a drastic and difficult time for investors.
Looking into New Investments
It can be tempting, especially when investing for beginners, to jump on the bandwagon as soon as a crash occurs. Usually, though, a quick rise after a crash won’t be the end of it, and it will likely be followed by an even worse crash later.
What’s more, in some cases, investing too early in a fallen market could fail to leave room for an even further fall. Thus, a new investor might see losses in their first ever investment, leaving them anxious and straggling.
The key is to not jump the gun too quickly. An economic crisis, like this, will have multiple waves of ups and downs; ride with the waves, and be prepared to pounce.
Is There a Light at the End of the Tunnel?
The main factor to bear in mind is that all this is unchartered territory, especially for younger investors who have never invested during an economic crisis. With this in mind, there has to be some good news for investors, right? Well, although it’s important to mention the drawbacks of it all, it’s clear that the benefits of investing money during this time could outweigh them…
The Benefits of Investing Money During COVID-19
For those who are seasoned investors, this economic downturn may have seen a loss of millions at a time. That said, if you’re looking into investing money for beginners, now could really be the time to step in.
Things Can Only Go Up from Here…
When a market crashes, shares become a lot cheaper for people to buy. This is because some investors might be looking to get rid of volatile shares quickly, before anything gets worse. Once the worst hits, things can only go up for new investors on the scene.
Once this occurs, the original price of the shares is nothing compared to what may come. With an incline in the market comes in incline in share values, making this an investment worth making.
Although we’re certainly not out of the woods, as of yet, there’s a high chance the lowering of lockdown will see the economy rising once more.
It Won’t be a Short-Term Solution
That said, as a new investor, you can’t expect to see a rise immediately. In such a volatile situation as this, it’s highly likely that you’ll see a loss before anything else. But, for the long-term investor looking to wait a matter of years to see results, this is the time to act.
At the end of the day, there is no way to know when the bottom of this slump will be. Many experts are suggesting that, considering share prices have dramatically increased already – even if it’s not the worst – buying in now is wise. Yes, you may ride the dip all the way to the bottom in the short-term, but you’ll also ride it all the way to top once we come out the other side.
The key is to keep a close eye on the governmental and bank responses to assess how they’re reacting. If they’re willing to splash the cash to prop the economy up, perhaps you should follow suit.
What Sort of Industries Might Be Worth Investing in Right Now?
So, you want to take advantage of this golden situation in the investing world? Then you’re probably wondering where to invest money to get good returns right now. Here is a list of some of the top sectors we can hope to see a rise in value over the next few months:
- Healthcare: many say that the healthcare system is basically recession proof, as nobody can choose when they get sick. So, this is always a good place to start for a steady investment.
- Pharmaceuticals: similarly, no matter what the economy looks like, nobody can control what medication they need and when. So, this sort of sector will always flourish, no matter what.
- Deep cleaning products: when all this is over, it’s no secret that the “new normal” will likely involve a fair amount of deep cleaning. So, for products that do the job, every public building and vehicle will require these supplies.
- Physical gold: gold is not tied to the stock market, so normally does well during troubling financial times, as it isn’t hit like everything else. What’s more, financial systems are pumping cash through them right now, meaning gold use will be at an all-time high right now.
- Gold-Mining Stocks: with physical gold becoming such a viable investment during this time, it’s clear that mining for gold will have to be invested in too.
- Electricity: similar to the healthcare system, electrical utilities will always be used, whether we’re at home, or living life normally. So, for another steady and sure investment, this is one to look into.
Those are just some of the sectors which are definitely worth looking into right now. That said, there are other smart ways to invest outside of physical sectors and supplies…
Corporate bonds could certainly be worth a thought. These are basically a loan made to a company, rather than a share in ownership, so that they can purchase goods and services, or anything else they might need. Then, when the bond expires, this money is paid back with interest.
Alternatively, investment trusts might also be a good place to begin, as they’re the best place to invest money without risk. This is when you put your money into the hands of the trust, alongside thousands of other people. These investment professionals then dole out this money as trades within the stock market.
Essentially, this means you rely on someone else to invest your money in shares, and these shares will fluctuate with the stock market, as any other shares would. So, when the stock market rises, so will the value of your shares.
According to statistics, the pandemic caused a rapid decrease in investment trust shares, but these are steadily increasing now. So, perhaps now could be a good time to get on the wagon.
Ready to Invest?
Clearly, the world of investment is changing every day. With such uncertainty, it really is down to your discretion whether you invest now or not. However, it’s clear to see that now is a good time to invest, if any.
Do you have any experience investing money during an economic downturn? Do let us know, in the comments down below, and let’s try and educate one another so we can get the best out of this bad situation.