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Invest your money in coronavirus times
The coronavirus crisis has plunged many stock exchanges worldwide. In the United States, the major indices declined similarly. It corresponded to a loss of 14 percent.
Investors hadn’t seen such massive sell-offs since the financial crisis. Investors around the world are concerned and are asking themselves numerous questions: What’s next? What does this mean for your own money? Do sales make sense? How can you benefit from the crisis? Is gold still a haven? Here is a brief overview.
Further price falls are pending
- After a sharp downward slide in the previous week, the markets initially calmed down with the expectation that the US Federal Reserve could cut interest rates.
- Investors were skeptical that the Fed hadn’t even waited until the regular meeting on March 15th.
- The OECD is also raising the alarm: if the coronavirus spreads further, the eurozone could slide into recession. It would not be without consequences for the markets.
- However, it is also conceivable that spring will keep the virus at bay with warmer temperatures, and the number of illnesses and economic consequences will not escalate.
- The indices recovered somewhat yesterday. Nevertheless: In any case, the virus should leave traces in the balance sheets.
Sell or sit out?
- Which plan makes more sense depends on the investment horizon. Anyone with a short-term perspective must know that portfolio can continue to slide into the red.
- If you think enduring, you can sit out the virus – or even buy it cheaper on new dives in the markets.
- However, it has technically proven that “market timing,” i.e., the attempt to get the best exit time and the cheapest entry time, is at best propitious. Therefore, investors who need money in the short term should sell.
Securing the deposit
- If you are concerned, you could secure your portfolio with stop rates. To do this, you have to activate a sell order for each position, but this only realizes at a specific, lower point.
- Put warrants are an alternative. They rise when the market falls and thus secure the deposit.
- Broad indices that match the investment regions in the portfolio are suitable as base values.
- However, hedging has its price: if the markets rise contrary to expectations, the money’s gone.
Fund savings plans and gold
- The crisis can also have positive aspects for investors with fund savings plans.
- Because those who regularly invest fixed sums, they get more shares for the same money because of the significantly lower quotes.
- A small share of the widespread crisis currency gold, around five percent of fixed assets, is usually considered sensible insurance.
- However, unlike stocks, gold does not generate any regular returns, had recently hardly benefited from sales on the stock markets, but had previously increased massively, by around twelve percent since the beginning of December.