Given the current circumstances, the odds of a recession dueto the coronavirus outbreak are rising every day. Recession as we know it,is often the result of an abrupt drop in spending, although certain triggers of a recession cannot be predicted in advance. A recession doesn¡¯t have to meanthat all investments should be put on hold.??
According to a report by The Balance, a recession can be the best possible time to begin investing because asset prices often fall hard. One can pick up stocks, bonds, mutual funds, real estate, private businesses just the way they would have done during a steady period. During a recession, different industries and types of companies and investments are often safer than others.
According to The?Economic Times report, the projections forworld GDP 2021 have fallen below 2.5%. Yes, there has been loss of production acrossthe board after businesses came to a screeching halt due to the pandemic. But allhope is not lost.
Here are sometips to think about when trying to grow your money during a pandemic:
According to FinancialTimes, for young investors, a consistent saving approach is the first key toan investment strategy. A global recession can be seen as an opportunity as there are chances of market values compounding three-fold. The reportstates that clear financial goals are all that matter; a habit of consistentsaving and investing has the potential to drown the worst recession in themarket. ¡°Markets have braced several recessions, and each time they haveemerged stronger,¡± states the report. There have been 33 U.S. recessions since1854, and investors who held onto stocks eventually survived the dip.
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A bear market is when a market experiences prolonged pricedeclines. It typically describes a condition in which securities prices fall20% or more from recent highs amid widespread pessimism and negative investorsentiment. Retrenchments, salary cuts or delays in payout are inevitableoutcomes of a sputtering economy. Make sure you have three-to-six months¡¯salary saved for a rainy day.
Rupee cost averaging is an approach in which you invest afixed amount of money at regular intervals. This, in turn, ensures that you buymore shares of an investment when prices are low and less when they are high. Theconcept of rupee cost averaging can be great when it comes to maximising your profits in thelong run. But it depends on the stock¡¯s future value. If a stock continues tofall, there could a chance that the company is facing troubles. In such a case,it is unlikely to rise in the future. This means there¡¯s no point in loweringyour average cost.
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The stock markets are witnessing a huge sell-off as thecoronavirus pandemic is expanding. According to a FinancialExpress report, mutual fund investors should continue theirsystematic investment plans (SIP) as they allow an investor to buy units on agiven date each month. The biggest advantage of a SIP is that theinvestor does not have to actively track the market.
No matter what happens in the economy, people still needcertain household items on a recurring basis. Toothpaste, soap, shampoo,laundry detergent, dish soap, toilet paper, and paper towels. Since theseproducts are always in demand, they're considered consumer staples. Basic goodsand services companies are the best bid to lay your stock investments in becauseno matter how well or poorly the economy works, they have higher chances tostay afloat.?
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