The following is a guest post by Gal Greene.
The stock market is notoriously unpredictable, even more so in the midst of the Coronavirus pandemic. This means that deciding exactly when and how to invest your money can get pretty tricky. That said, there have been a few recent signs that should point investors in the right direction.
So, is now a good time to invest in the stock market? If so, what is the best place to invest money right now? We will answer both of these questions and more, but first, let’s look at how the markets have moved during this ever-worsening pandemic.
Investing During the Coronavirus Pandemic
The markets have been in a volatile state over the past few weeks. After reaching an all-time high in mid-February, both the DOW and S&P 500 came crashing back to Earth, virtually erasing the gains from the past 4 years. While the markets are showing signs of life at the moment, it seems that the panic over Coronavirus is not going anywhere.
The question is not whether or not the markets will recover (they almost certainly will), but when and how fast they will recover. Some experts estimate that the Coronavirus pandemic (including social distancing, shuttered businesses, and other measures that would affect the larger economy) could go on for 18 months or more. Needless to say, these extreme measures will likely stunt growth and revenue in the short-term.
Is Now a Good Time to Invest?
Though it is impossible to answer this question with 100% certainty, the short answer is: yes. As it currently stands, stock prices are lower than they have been in years. While investor confidence is extremely low, many stocks, ETFs, and mutual funds are already starting to rebound from the initial selloff.
But how can you know that prices won’t continue to plummet? The truth is that you can’t know for sure. With the pandemic raging onward, many companies will continue to lose money and prices will fluctuate. That said, we’ve likely seen the worst of the price drops. As governments around the world take more aggressive measures to combat the virus, investors will start to regain confidence and put their money back into the stock market.
With that being said, you should definitely proceed with caution. Learning how to invest in the stocks market and mastering ETFs, stocks, bonds, and mutual funds is now more complex than ever before. Though many investors stand to gain from historically low stock prices, there’s also the chance that things could get significantly worse before they get better.
For this reason, you should consider reinvesting your money slowly. Take time to study the markets and invest in small increments rather than dumping your available cash into stocks or bonds all at once. This is especially important if you’re new and want to learn how to invest in stocks or find good investments for beginners.
What is the Best Place to Invest Money Right Now?
There isn’t one specific company or stock that stands out from the rest. Right now, Coronavirus has negatively impacted business in just about every sector of the economy. However, there are a few industries that stand to gain (and lose) the most in these difficult times. So, if you want to get a healthy return on your investment, check out some of these industries:
Industries to consider:
- Healthcare – Stories of overcrowded hospitals and limited medical supplies have dominated the news cycle as of late. While this may sound like a drawback, it means that the demand for medical resources is extremely high. Expect to see healthcare-centric funds do well in the coming months.
- Technology – The Coronavirus has exposed many of the weaknesses in our economic system. People will look for new innovations to help limit the spread of viruses and help people communicate rapidly during crises. Though the exact nature of new technology will be hard to predict, the chances of growth and revenue are high.
- Real estate – Though almost every facet of the economy has been impacted, the real estate market will likely emerge from this crisis relatively unscathed. However, in the short-term, people are not very liquid. This means that people won’t be able to secure mortgages and invest in real estate until the markets have fully rebounded from the Coronavirus.
Industries to avoid:
- Travel – With dozens of travel restrictions and a general aversion to crowds, the travel industry is taking a huge hit at the moment. It will also take a long time to fully recover.
- Hospitality – Similarly, the hospitality industry is not doing well at the moment. Social distancing and limited travel mean very little growth going forward.
- Entertainment – Most major film, theater, and television productions have already been shut down. Combine this with dismal theater attendance and you’ve got a recipe for a bad investment that will only get worse.
What do you think? Is now a good time to invest in the stock market? What are the best stocks to buy now? Let us know in the comment section below!