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The state of lockdown has crippled economies and investments throughout the world, impacting millions who were looking for options to park their additional capital. Investment options during a pandemic are limited and the way in which the return to investment works is also altered due to the effects of the pandemic.
If you are looking forward to investing your money smartly amid the novel coronavirus outbreak, this quick read will help you. In this thread, we have encompassed different strategies, techniques along with tips and tricks that are vital to following when choosing investment options during a pandemic.
The investment options vary on the basis of the age bracket an individual falls into. For young investors, there is ample time to recover themselves financially. The ideal strategy that young investors should follow during a pandemic should be moderate which means that they should already have an emergency fund in place along with a steady job that allows them to pay their bills and manage their expenses efficiently.
An emergency fund is extremely crucial during such phases as it empowers an individual financially and ensures a blanket of protection even when times are not favorable. With a stable job, one can easily manage and continue to maintain their current lifestyle without any hassle.
The market is currently under great depression which provides a unique opportunity of investing in stocks. Young investors should consider stocks as an investment option during the pandemic as the rate of return is quite high and investment cost is also low.
Young investors should avoid heavy forms of credit during the pandemic as they are not favorable for financial well-being during the state of a pandemic. Furthermore, if you want to reduce the degree of risk in equity you can invest in the share market. If stocks as an investment option do not work suitably for you always have the option of selling them which makes them highly suitable for young investors not just in the UAE but all across the world.
If you are in the age bracket of 45 or above you should start building a capital reserve for yourself, which can be done by selling some of your old assets. You can pull returns out of your mutual funds or sell some physical gold to build a reserve that will help you financially during the pandemic.
Stocks would not be the reliable choice if you are willing to invest your money within a period of six months to two years as there is no certainty. If possible, investors should try and delay their retirements and try to work for another year or two as retiring during the pandemic might create a series of problems.
Nearing retirement investors should opt for more safe and secure forms of investment as their appetite for risk is substantially lower than young investors. Investment options like bonds, fixed deposits, savings bank account are some of the best options for nearing retirement investors as the degree of risk associated with these investments is very low and returns are moderate. Once the pandemic is over investors can reanalyze their financial situation and choose investment options followed by retiring.
If you fall in the age bracket of above 60 and you have a considerable cash reserve, the right strategy to opt during a pandemic is to put a pause at investment for a small period of time and utilizing the cash to manage expenses and paying bills.
Selling investments during a pandemic for retirees is not suitable as the rate of return is very low and the benefit obtained is very small. However, if you don’t have a cash reserve then it is vital to building one. You can use your pension or returns from your retirement plan to build a small reserve that will help you financially during the strokes of uncertainty.
Another suitable option by which retired investors can save a considerable amount of money is moving in with other family members. This is will not only save money but will provide them a better quality and safety during the time of a pandemic.
In a Nutshell
The novel coronavirus outbreak has shaken economies and investors worldwide. The world of investment has suffered substantially as markets have fallen down. Therefore, choosing the right investment option is extremely important. With the above-mentioned tips, it would become easier for you to choose investment options during the pandemic.