There are a lot of challenges caused by the COVID-19 pandemic. There are health and medical challenges, family survival challenges, political challenges, business challenges, and of course, economic challenges. And these challenges greatly affect the decision making process of people when it comes to investing. What do we need to know more about investing? What are the lessons we can learn from the COVID-19 experience? Here are some takeaways from the pandemic that you can consider for your future investment plans and actions:
Takeaway #1: Understand the concept of investment
A big number of investors might be experiencing their first downturn in the stock market due to how the pandemic affected the economy of the country. Some investors may have experienced this already from the 2007-2009 Great Recession, but they may have forgotten the feeling of seeing the sudden drop in the market. The feeling of worrying and the urge to make sudden actions are understandable actions to a falling market. This is why we have to review our risk tolerance and investment objectives before we decide on where we will invest our money. Again, fully understand the concept of investing so that you will be vulnerable and capable of knowing that it is not always about earning.
Takeaway #2: Don’t fall back on investments
People don’t want to feel pain; this is why it is understandable for them to avoid it. And to avoid pain, they tend to have short-term decisions that might affect them in the long-run. Just like in investing, if you feel like selling your stocks from a falling market might ease up the pain, you might be missing the chance of getting the perks when the market starts to rise again. It may be tempting to cash out your stocks but always think of the long-term plans you have when you first started investing. Short-term challenges will eventually pass, but long-term harm may affect you for the rest of your life.
It’s hard to tell when will everything start to normalize again. If you are challenged financially in the current situation, may you at least learn something from the experience for you to be prepared and ready whenever, hoping not, a crisis will come again. May we all be smart, safe, and learn something valuable from these challenging times.
