One positive that has happened from the pandemic is that stocks have been more accessible for Americans to buy, and buy they have. Buying stocks and investing long-term in solid companies can help you accumulate wealth but don’t be the first to jump at low stock prices.
Prices are lower than ever, but investors are ditching. In the current phase, foreign investors are exiting the market and according to a survey done by ET Wealth, only one out of six investors is planning to buy aggressively at this stage. The forces of the pandemic have been extremely negative on the stock market and the worry is that it’s not done yet. With that said, after the market index fell 34% in just over 30 days from its peak in February, it has rebounded more than 40% from the market bottom in March.
So it leaves the question, should you buy stocks now during a pandemic? Well, there’s not really a straightforward answer.
For many investors, the market is at its most unstable as lockdowns and social retractions continue to keep businesses closed and affect the economy both nationally and internationally. Trying to predict the future can be near impossible, with the current pandemic crisis adding an additional layer of confusion. Another consideration to take into account are the government stimulus and fundamentals that have made the stock market volatile and unpredictable, with coronavirus stock repercussions unknown in the coming future or months.
At the same time, risk has never been an obstacle and that doesn’t necessarily mean you can’t or shouldn’t buy stocks right now. Global gross domestic product (GDP) has steadily risen over time despite drops during the occasional depression, draught, and recession. As long as you have cash you’re willing to keep invested for the long haul, there’s a good chance if you buy stocks now, you will gain that wealth in the forthcoming five to 10 years. You’ll want to make sure you prioritize your emergency funds and have at least 6-9 months, or more during a pandemic, of a money reserve should your finances take a downturn. There are thousands of stocks trading on the NYSE and Nasdaq that are growing and not falling during the pandemic, you’ll just need to research and decide which ones you trust will . To reduce risk, make sure you spread your investments out and don’t put all your eggs or money into one company.
At the end of the day, the same strategy applies now as before. Research the companies, invest in good companies, and hold them for the long term. It does require patience and risk tolerance, along with drops that may happen from a pandemic, but it’s a long-term strategy that is bound to give you more returns down the road. Diversification is incredibly important and if you need help with financial planning, work with a stockbroker to discuss your ideas and goals. Once you feel firm in your decision, select stocks that you believe in and wait it out for longer than the pandemic lasts.