The coronavirus pandemic has impacted the world’s healthcare system and the economy severely. With one country after another going on lockdown, there has been a significant decline in the global economy since World War II.
In such a situation, a lot of people wonder whether or not they should start/continue with an investment. However, this decision depends on certain factors, especially when making investments during such uncertainties.
This is not the first time that the world economy has taken a hit. And every smart investor is well-versed with the fact that these events are short-lived. When it comes to investments, we have to think long-term. During such chaotic situations, investors need not lose their calm. Know that the market has recovered from such losses over time.
To help you understand this better and make wise investment choices during this pandemic, here’s what you need to do.
Be Consistent And Disciplined In Your Investments
In the due course of this pandemic, it is essential that you do not miss out on your premiums. Whether you are investing in unit-linked insurance plans (ULIPs) or mutual funds, this is not the right time to succumb to fear and greed.
Avoid taking any harsh and immediate decisions when it comes to investments. Reevaluate your financial goals and understand why you started this investment in the first place.
Be Smart And Aggressive If You Have Surplus Cash
In case you have extra money during this chaotic situation, try making additional investments with the help of your fund manager. However, choose plans that allow the cash to grow in the course of the next 6-12 months. In fact, people invested in SIPs can benefit from rupee-cost averaging during such situations.
Build a Sound Investment Portfolio
When making a sound investment portfolio, you have to consider the four key elements.
- First, you need to build an emergency fund. An emergency fund is nothing but an amount kept aside to overcome the expenses of at least 3-6 months. This money should be easily accessible.
- After this, consider investing for short-term goals such as education abroad, wedding, or buying a house. These financial objectives could be accomplished by investing in short-term assets with low-risk.
- Next, invest for expenses that you may see arising over the next 3-5 years. To accumulate money for the same, you can consider investing in ULIPs or ELSS. Before you do so, know which investment is better between ULIP vs Mutual Fund.
- Lastly, invest in the bigger picture. These are long-term financial goals such as retirement which is years away from now.
With a balanced investment portfolio, you will be able to get through any damage caused to your investment returns during the pandemic.
Seek Professional Assistance
In the end, if you need clear guidance on investments during a pandemic, it is advisable to seek professional assistance. You can talk to your financial advisor, wealth coach, or CA who will evaluate your investment portfolio correctly and provide the needed assistance.