Financial crisis such as the one caused by the present pandemic can be very scary. The economy is declining drastically, leaving businesses and people stuck on what line of action to take. However, you can benefit from a financial crisis by investing wisely. Keep reading to learn more.
Tip #1: Diversify Your Portfolio
Diversifying your portfolio is important during a financial crisis. However, it can be a daunting task trying to figure out the most suitable combination of cash, bonds and stocks. The best bet should be what makes you comfortable the most. As soon as you figure out the most comfortable combo for you, don’t alter it drastically. You should only do occasional tweaking, leveraging an expert’s advice.
Also, you need to portray confidence on the mix you have chosen. This way, a financial media outlet won’t easily influence your portfolio. It’s not good to influence your strategy based on emotion. While it may help reduce a financial crisis impact, it won’t completely shield you from short-term loss.
It’s always good to diversify your funds rather than putting them all in stocks. During crisis, you may be hit so hard. In fact, investing more in bonds than in stocks can be a safer harbor in times of financial crisis.
Tip #2: For Certain Risks, Do Not be Averse
Investments in stocks comes with automatic risk taking, this is because of their high volatility. It may be too risky to invest in stocks during a financial or economic crisis. The 2008 market crash was a typical example. When stock fell in that year, many investors were financially devastated and sold off everything.
These people would have been beneficiaries of the crisis if they rode out the market crash. This is because when things stabilized again, majority of the stocks gained a boost. Sometimes, you need to partake in a risk to gain an opportunity.
Risk taking can pay off ultimately sometimes. You may invest just a little sum in times of crisis. Who knows, you can get a good return on the investment when the dust settles and things get back to normal.
Tip #3: Stay Calm and Confident
No doubts, it is difficult to maintain calmness and confidence when financial crisis hit. Being confused on the next step or solution to adopt can be an uncomfortable situation. However, you need to brace up and stay calm, so that you can think rationally. Staying in control of your emotion can help you survive the incident.
One of the ways to remain calm and confident is to see beyond the moment. In essence, adopt a future-oriented mindset. Start brainstorming on how to make good use of the crisis to create a better tomorrow.
So, as you stay home to stay safe, take advantage of these tips to invest wisely.
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! Inspires entrepreneurs to build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.