It goes without saying that the Covid-19 pandemic has had a major impact on the global economy and the financial hardships are being felt by millions of Americans. Even though we are in unprecedented times and many have been forced to close their businesses or are left unemployed, the pandemic may actually surprisingly cause more individuals to take on investing. Although it may sound unexpected, investing during these times is quite smart as it gives people the chance to accrue more wealth and funds, in addition to building more financial security for the foreseeable future.
According to a modern wealth survey conducted by Charles Schwab, about 22% of Americans were found to be more likely to begin investing for the first time during the current pandemic. Additionally, one in every five Americans also indicated that they are more likely to invest more into the stock market now during the crisis and economic uncertainty. Many would ask why are people looking to invest during such an uncertain market? There is no clear answer to that question but given the downfall of the workforce and thousands facing unemployment, Americans are realizing that they need a financial security blanket. They need a source of income in order to support themselves, their families, or even their businesses and investing in the stock market or property is a safe bet for them. Given the volatility of the economy and market right now, it makes sense for investors to buy stocks since shares are more likely to be on sale during this downturn. The end goal for these buyers is to see great returns on their investments when the economy eventually recovers and returns to normal.
In addition to just investing in the stock market during the pandemic, Americans are also turning to real estate property, which may actually prove to be even more valuable. It’s important to approach these investments with caution however; given the uncertain market, it may be wise to be conservative with your estimates and possibly take a look at lending money to other investors rather than completing tighter deals by yourself. Solid investments right now include single family and small multifamily properties because the prices are generally less volatile and rent-to-price ratio is also more favorable. Another thing to consider is also the market area where you are purchasing these properties. For single family and multifamily units, smaller towns are more likely to generate at least twice the cash flow compared to properties in bigger, metropolitan areas. With higher cash flow, you have more financial security and greater ability to weather any unforeseen market downfalls.
All in all, we truly are in unprecedented times and no one really knows what the future has in store for us. More and more Americans are seeing the opportunity to invest as a great way to spur revenue and receive funds that will allow them to remain financially stable for as long as the global economy struggles. Whether it be buying shares of a company or looking to invest in real estate property, the two most important priorities are security and liquidity. Especially because of the uncertainty, it is crucial for investors to stick to the fundamentals and generally play it safe with deals. This doesn’t mean to sit around on the sidelines waiting for something big to happen, but you should also be careful to not dump your entire assets into one investment either which could turn out to be negative. Very few investors are skilled enough to turn a long-term profit with day trading, so for most Americans, the path they will go with is leaving money invested for a few years or increasing the cash flow they are putting into the market.