Today, there is a significant opportunity for investors to enter the market. This is the time for investors to get serious and to decide how much money they can put into the market to make a profit.
David Ebrahimzadeh explains why the current economic conditions represent a unique opportunity for investors to take advantage of market movements.
Understanding Stock Market Trends in 2020.
Surprisingly, the COVID-19 pandemic has had a muted effect on stocks. While swings tend to happen in response to major news stories, such as when President Trump was confirmed to have the virus, the stock market has largely proceeded as usual.
Economists underline the idea that the stock market is not the same as the overall economy, and that investors should consider the unemployment rate, housing, and rental prices, and cost of living as measures of economic performance.
Long-Term Investments.
When investors are in the market for the long haul, it makes sense to buy while stocks are low. At the beginning of the pandemic, investors had a wide window to buy stocks and other securities while they were low. Today, the window is smaller.
Good examples of stocks to invest in now include pharmaceutical companies, multifamily housing builders, and tech stocks. These stocks are likely to continue to perform well despite any dips in the rest of the market.
Real Estate Investment.
This would be a great time to invest in multi-family housing stock outside the inner cities. In the inner cities, a COVID-driven exodus has caused the rental market to become flooded with vacant units and has caused prices to go down. However, outside major metro areas, rental prices are on the rise as the available stock has been lowered.
Getting Serious about Investment.
Beginning investors need to understand that every month counts when it comes to increasing your profits. It is better to get into the market in any way possible, even if you only have a small nest egg to invest in. If you are not invested in the market at all, you will not have the opportunity to take advantage of today’s growth potential.
New Ways to Get into the Market.
Young or novice investors may not have a large amount of money to put into the markets. Fortunately, several ways have emerged that make it easy for small-scale investors to dip their toes into the market.
The first piece of advice when it comes to beginning investment is to have your investments automatically deducted from your account. If you are investing the same amount of money each month, even if it is small, you will begin to see returns.
One of the best ways to get started is by using a Robo-advisor. Robo-advisors are driven by algorithms, and they are perfect for investors with a data-driven mindset.
There are several investment platforms aimed at people with small balances. For example, Betterment allows investors to start with no minimum balance. Higher balances are rewarded with a waiving of management fees for certain periods.
Crowdfunded Investments.
Crowdfunding is one of the hottest concepts in business today. When investors can take part in crowdfunding, they can team up to make larger investments and share in the profits. Crowdfunding has become especially popular in the real estate market.
Real estate is generally a winner compared to the stock market when looking at long-term gains, but investors should be aware that real estate is not a liquid investment. Buying and selling real estate could take a matter of months. Crowdfunding or using REITs (real estate investment trusts) makes it easier to get your money back quickly.
Getting Ready for Retirement.
If you are a short-term investor or getting ready for retirement, this may not be a good time to buy, since prices will probably continue to fluctuate. You may find that investments like real estate or real estate investment trusts (REITs) could be a better option for you.
One of the keys to successful short-term investment is recognizing the factors driving the market. It is not enough to chase short-term market trends, because by the time the news has spread about a stock, the movements are already taking place.
Making Investments Work for You.
While beginning investors have a significant opportunity to become vested in the market, caution is encouraged. COVID-19 is causing some unpredictable changes to many economic indicators, and while prices may be low in some areas, it is likely that they could continue falling.
The economy remains on shaky ground, but the stock markets continue to do well. Economists understand this effect, but the general public may find it mystifying.
David Ebrahimzadeh encourages all beginning investors to do their homework and to come to a full understanding of economic conditions before making any significant investments. This data-driven approach, rather than investing based on sentiment, is likely to bear fruit in a changing market.
