Having a well-managed investment portfolio is one of the best things you can do to safeguard your family’s future. So, when you are facing a long period of market uncertainty, like during a global pandemic, it’s natural to feel a little uneasy about your financial security. If this is your current situation, you should acknowledge your feelings of concern, take a deep breath, and take on these four investment strategies for uncertain times.
1. Get Expert Advice Regarding Commercial Property
The property sector has been affected differently depending on location. For some people, this is a time of opportunity as the areas they had their sights on for investment are seeing a fall in property prices, also making commercial markets more accessible to buyers. Before you take advantage of what seems to be a good deal, be sure to consult with a commercial real estate agent who will provide you with a much clearer picture of the market situation in your area and properties of interest. The guidance of a reliable agent can help you make better investment decisions and avoid expensive mistakes.
2. Do Not Panic Sell Any Assets
If you are a newer investor or have made a lot of higher-risk choices but have never experienced a market downturn before, remember now, more than ever, not let any fear or feelings of shock dictate your selling decisions. Avoiding panic selling during a market crash is one of those golden rules of investing you hear all the time and never second-guess until you actually see your equity falling before your eyes.
Remember that volatility is normal. Downturns, over time, tend to be followed by upturns. If you sell into a declining market, however, you are guaranteeing yourself a loss. So, do yourself a favor and make a calculated decision before selling, or just wait it out.
3. Making Small, Regular Investments
Dollar-cost averaging is a strategy you should consider if you are averse to risk and plan to hold your investments over an extended period of time. It refers to buying your assets at a fixed dollar amount over a scheduled period, rather than putting all your money in at once. This simple technique protects investors against market fluctuations as the focus is on accumulating assets over time rather than trying to get in at the best time (aka “time the market”). Another way to utilize this highly recommendable strategy is to reinvest your dividends with a dividend reinvestment plan (DRIP).
4. Remember That Risk Is Rewarded In The Long-Term
Don’t make any rash investing decisions during this turbulent time. While it is true that equity investments are subject to a lot more risk than cash or government bonds, the potential for reward is far greater also. It can be difficult when you are reading news about economic or political instabilities, but if you stick to your guns and remain invested during this period, you are much more likely to reap the benefits of a consequent market upturn or correction. Historically, markets have reliably returned an average rate of 10% annually since the 1920s, so you are also very likely to recover any losses by simply staying in the game.
A global pandemic may be a rare event in the grand scheme of things, but market volatility is a natural phenomenon that every investor will experience in their lifetime more than once. Stay safe and follow these investment strategies to get through this difficult time.
Photo: Kat Nelson/Unsplash
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