Many will want to forget 2020 quickly, and understandably so. This has been a year of unprecedented hardship both in healthcare and economic terms globally. Millions have seen their livelihoods disrupted and countries plunged into recession.
One thing that has been a silver lining for humanity in this tough period is the strength of online commerce. The likes of Netflix and Amazon are having record years because the Pandemic has played into their strengths. They have been a key reason why stock markets like the NASDAQ have had a resilient streak from the lows of March.
Investors, through reliable and highly reputable online investing brokers, scramble for these stocks. If there is one lesson from this pandemic, it is that technology is the future, and the future is now. Unconventional money-making fields like esports have seen tremendous growth in the past decade and became a legitimate channel to earn reliable money. For some gaming competitions, the players prepare and give it the attention to detail professional athletes devote to their craft.
The best time to invest is now
In the aftermath of any crisis, there are always great opportunities. Warren Buffet famously mopped the floor with cheap stocks in the aftermath of the 2008 financial crash, which then appreciated gradually in the subsequent years.
Capitalizing on such opportunities does not have to be the reserve of high net-worth investors. Anyone with a decent amount of capital and the ability to discern genuine opportunities has lots of opportunities to put their money to work.
It is still uncertain when the Covid-19 Pandemic will be behind us. The potential for another surge in the fall remains a distinct possibility. Luckily, so do the prospects of a viable vaccine before the close of the year. Either way, it is unlikely that governments will resort to the full-scale lockdowns again to cope with the virus. This means that economic activity will mostly continue on an upward trajectory in the coming months, even as the impact of the recession lingers.
Stock markets are understandably anxious right now tracking developments closely. However, the underlying economic indicators point to a resounding 2021, should the virus have abated by the start of next year. The time to get into the market is when it is low because the upside from a surge can be extremely rewarding.
Passive investment in this context means an investment that does not need your constant involvement. You may want to invest in the market, but are grappling with how you will accommodate all the trading logistics into your daily schedule.
The image of a frantic trader on the floor of a stock market with a pad, on one hand, an earpiece, and eyes glued on charts all the time may be understandably discouraging.
Thankfully, there are modern tools that make passive investing possible. Technology and the internet have played a vital part in simplifying the stock market for many ordinary people. Saving money is great, but that alone is a difficult path to building money.
The exception, obviously, is people with very well-paying jobs. Unfortunately, most people don’t have that luxury. Saving money, with inflation constantly going up, is not reliable.
Robo-advisors and investment funds make life easier for many investors. Instead of doing the manual work of tracking individual stocks, these tools can be a reliable way to find the right stocks. Robo-advisors help you track Exchange-traded funds automatically and make investments on your behalf at a small fee.
Mutual funds pool together investor funds and invest in a select number of stocks. These funds are usually managed by market professionals who pick high-performing or high-potential stocks to invest in.
Index funds are like mutual funds, only that instead of tracking specific stocks, they track entire indices like the S & P 500 or NASDAQ. Of these modes of investment, it is arguably the most passive. There is little human expertise required for them to operate and generate money.
It goes without saying that stock markets experience constant turmoil. If you look at stocks every day, you may develop too much anxiety. This mode of investing requires a great deal of patience and understanding that momentary swings don’t reflect trends over a considerable period of time. The S&P has grown at a consistent rate from one decade to another, with occasional crashes, reflecting general economic trends.
Therefore, it is prudent to invest with long term goals in mind. This will allow you to make more calculated choices and have less risk. Besides, it is best to diversify your portfolio as much as possible. Putting all your eggs in one basket can come back to bite you.
Investment doesn’t have to be a complicated affair. There is great potential in using the mentioned channels to make money and build your way towards wealth.
*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.