The new rules of investing
How to make money in a post Corona world
Yes, we know, we are still in the thick of a global pandemic but in order to stay ahead, you have to think ahead, which means that pretty soon, thoughts are going to need to move from survival mode to success mode. But with the situation changing on an almost daily basis and more uncertainty than we have ever seen, what are the new rules for investing and how do we make sure we are winning, not losing in this new world?
There’s no such thing as perfect timing
In a stable market, it can be pretty easy to see peaks and dips but in a period of such economic and social instability, it’s really anyone’s guess what is coming each day. Which, in investment terms, means that no-one can really predict when the bottom will hit the stock market and when the inevitable upswing will be, so we can’t workout when will be the best time to invest. On that thought, Rob Morgan, Investments Analyst at Charles Stanley says that “If a credible view develops that normal life will resume after a shorter period of disruption, shares could bounce substantially. On a longer term view, say ten years, it shouldn’t matter too much to your returns anyway and if the thought still makes you nervous, one way to counter market ups and downs, as well as take some of the stress out of investing, is to contribute money at regular intervals, for instance once a month, rather than a lump sum in one go. The strategy can even turn market volatility to your advantage as you ‘average down’ if prices fall further in the shorter term.”
Well this rule goes hand in hand with the first new rule and really, if you think about it, makes good common sense. Even the most optimistic of us out there will realise that the markets are not going to be stable for quite some time so testing the water if you will, will make sense investment wise. Dip into the markets gradually and although your returns won’t be life-changing, they will yield results and will help you learn the new rules of investing.
In a period of economic uncertainty like this, it’s easy just to take your money and run but, according to Sarah Coles from Hargreaves Lansdown, this could cause more harm than good.
“If you already have investments, the key is not to panic and instead, focus on why you are investing. If you are putting money down for the long term, none of this has changed, it’s just that we are seeing some unusually big falls in the short term. This can act as a good time to think about your investments and if you have a broad enough spread of funds and that you portfolio is diverse enough. If it is, and you have a long terms view, then the best thing you can do is sit tight so you are poised to take advantage of the inevitable gains.”
Invest in what you use
Would you have ever thought that you would live in a world when you can’t hear a plane go past? When hotels are empty and resorts are shut? Well, as we sit at home conducting our meetings over Zoom, this is our new normal. Where am I going with this? Well, quite simply, the rules have changed and if you are looking to invest, look around you, take in what you use each day and think about how the playing field has changed. Technology, security, healthcare and food companies are all areas that have held up and boomed in this pandemic and are likely to continue to post lock-down.
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