Stock markets have been punished in recent weeks as COVID-19 has spread through the United States. Despite this time of cultural, health, and market-related turbulence, some investors are looking at stock market futures with optimism. Despite doomsday reports from the news, experienced investors know that there is plenty of ways to make money and preserve assets during this outbreak. How are these investors preserving assets during the COVID-19 crisis, you ask? Read on to discover how investors are using these tried-and-true investing techniques for asset protection during the COVID-19 outbreak.
Stay Consistent During Times of Concern
Even though uncertain investing times are ahead for United States-based investors, investing experts suggest that investors should stay consistent with their investing plans.
Market experts argue that most investors have spent a considerable amount of time designing their investment plans and that they should stick to their strategy even if the market is struggling.
Most investors are also quick to remind others that the market experienced slumps over the past 100 years. During this period, the stock market has always managed to rebound. Keeping history in mind, as well as sticking to your investment plan with consistency, is a great way to protect your assets during the coronavirus pandemic.
If you’re new to investing, investment strategists suggest that fresh-faced investors put money into the market gradually. Instead of dumping a considerable lump sum of savings into the market, experienced investors recommend utilizing a strategy like dollar cost averaging when investing during periods of market uncertainty.
Benefits of Dollar-Cost Averaging
Dollar-cost averaging is an investment strategy built around the idea of an investor placing a pre-determined sum of money in the stock market during regular intervals of time. For example, some people invest $150 in VTSAX every paycheck.
Dollar-cost averaging was designed as the perfect middle ground between risk and reward. Take a second and imagine putting a large sum of savings in the stock market during this volatile investing period. The next day, President Trump announces that he has decided to prolong self-quarantining measures because COVID-19 cases flared up in different cities across the country. Stock values tumble once again in response to these prolonged quarantine measures, and you have lost a good chunk of the cash you placed in the market the day before.
Utilizing a dollar-cost averaging strategy helps minimize this risk of losing a substantial amount of your savings in a rocky investment cycle because you are only putting small bits of your savings into the stock market at a time. For this reason, dollar cost averaging is an ideal investment strategy for those looking to protect their assets during the COVID-19 outbreak.
Disclaimer: This article is meant strictly for informational purposes. Not intended as financial or investment advice. Do not misuse or misconstrue the information in this article. Seek advice from your personal financial advisor on matters pertaining to investments/finances.