Tips For Investors Who Are Unable To Invest Due To COVID-19 It's always a good idea to invest when the markets are down rather than waiting for them to pick up
By Archit Gupta
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The outbreak and spread of coronavirus across the world have affected most individuals and businesses in some way or the other. Trade activities have been stalled as countries have been forced to go under lockdown in order to prevent new infection cases. This has resulted in individuals being unable to access the services of certain sectors.
The financial lives have taken a hit as several organizations are forced to resort to cost optimization to preserve their capital due to the unprecedented economic crisis which is induced by the COVID-19 pandemic. If you have not invested during this favourable time for investments, then here are some tips for you.
Invest when the markets are down
The latest pandemic has induced a significant fall in the stock markets around the globe. This makes for the right time to invest in equities as several stocks have hit their multi-year lows. Therefore, you may consider investing in stock markets as you can pick up stocks at a relatively lower price. You get the benefit in the long run as the businesses will eventually return to normal over time and thereby providing you with the benefit of scale.
However, to invest in stock markets, you are required to complete your know-your-customer (KYC) process. This can be done online in a matter of a few minutes. If you have not completed the KYC process yet, then it would be best to complete it right away and start investing to enjoy long-term benefits.
Government savings schemes are no more attractive
The falling markets and damp economic developments have led to the government to lower the interest rates on popular government savings schemes such as Public Provident Fund (PPF), National Savings Certificate (NSC), and so on. This means your investments in these schemes would grow at a restricted rate, which will ultimately lead to earning less than inflation-beating returns. In order to beat inflation, you have to invest in equity-linked investment options. Also, the fact that markets are favourable for investments now, it is only wise to enter the markets by investing in direct equities or mutual funds.
Diversification is the key
Putting all eggs in one basket is never a good idea. If any of the eggs gets spoilt, then there is a possibility that other eggs also get spoilt. The same logic applies to investments as well. It is never a good practice to invest heavily in one investment option. On doing so, you run the risk of concentration. If that investment option does not yield good returns, then your entire investment will take a hit. To avoid the risk of concentration, you need to invest in a variety of options. An ideal portfolio would contain a blend of investments in equity, debt, commodities, and government savings schemes.
The current market scenario is ideal for entering markets. If you have not invested yet, then you may consider investing now and enjoy long-term benefits.
