COVID-19 has had an impact on everything from our health to the way we shop and even global markets. Few countries have escaped the virus, leading to a huge economic crisis.
While it might not seem like the best time to invest, now is actually a great opportunity for investors. So, what should you know about investing during a financial crisis?
Why could now be a great time to invest?
There are a lot of potential benefits of investing during an economic crisis. As the global markets have been hit, you’ll find stocks and shares are cheaper now than ever before. This gives you the opportunity to invest in stocks that would have otherwise been unaffordable before the crisis.
Most people are getting out of their investments due to fear and panic. This leaves the markets wide open for new investors. It is said that the worst thing you can do during a financial crisis is nothing. So, if you’re willing to take the risk, now could be the perfect time to invest.
High risks, high rewards
While there are benefits of investing during a crisis, the high risks can’t be ignored. Not all markets will recover, meaning there is a big chance you could lose what money you do invest.
Of course, the higher risks mean the rewards are also higher. During a financial crisis, you can expect investments to be riskier but much more lucrative if they pay off.
A great way to minimize the risk is to use the services of financial advisers. They will be able to help you determine which investments pose a lesser risk.
Things to avoid when investing during a crisis
If you do decide to invest, there are a few things you’ll want to avoid. For example, if you don’t have any savings to fall back on, investing is probably a bad idea.
You’ll also want to avoid touching your portfolio for at least seven years. So, if you’re looking to touch your investments soon, you’re not going to find it profitable to invest during a crisis. Also, ensure you’re choosing less risky stocks where you can. Some stocks are definitely considered riskier than others, particularly in sectors that are struggling to survive.
Overall, investing during times of financial crisis can provide great opportunities for businesses. However, it can also be extremely risky. It’s important to understand your options and seek professional advice if you don’t want to lose further money during an economic downturn.