Collaborative Post
With very uncertain times ahead of us at the moment with the Coronavirus global pandemic, is it a good time to buy stock shares?
The stock markets are in chaos at the moment due to the current crisis and many investors are wondering whether now is a good time to buy stocks while the market is falling.
If you have some money available to invest, then here is why it might be the time to strike while the iron is hot, so to speak.
A cautious approach is needed while a little investment, with the view to it being long term. Stocks could fall further still, so you need to be prepared to play the long game. The economy will be very volatile during the uncertainty of Covid-19 and it can be hard to predict what will happen in the next few months.
Invest gradually
If you have a larger sum to invest, then consider investing with a company like forex trading for the next few months. It’ll be safer to break up your contributions if the markets go lower. It’s always a good idea to set up contributions from your bank account that automatically go into your investment, over the course of several months.
You want to be looking at your investment for the next few years and you don’t want to be putting in money that you will be needing to access fairly soon.
With long term investments you can expect periods of falling prices that will eventually recover. The key is to know that these fluctuations are normal and it’s important that you manage to feel at ease with this, to avoid making any rash decisions. It’s all too easy for people to sell their investments and keep their money in cash. However, cash leaves you open to inflation.
Know the quality of the shares
You need to be looking for stocks that are going to be resilient in this economic climate. Your main concern is to reduce the risk of loss if conditions deteriorate further. Consider putting together a financial planner to make it all seem a little less stressful. Having a clear plan in mind can really help you keep your goal on track, as well as helping you get there faster and easier.
Weigh up the risks
As mentioned before, the state of the economy will play a large part in how well your stocks will perform. If a share price reduces then the value of your investment reduces too.
Shares historically provide better returns in the long run, compared to other assets such as property, bonds and savings.
It is more risky to hold all of your shares in one company, so it’s always worth spreading out your investments into different companies, to minimise your risk as much as possible.
If you’re well diversified and are willing to invest for more than five years, then you can keep your risk down and have a chance of some decent returns.