Top Investment Advice for Strange Times is what you need right now as we live in such uncertain times. Investment is of paramount importance and is entirely necessary for most people in order to enjoy a secure future.
Why invest? Investing will provide you with another source of income, help finance your retirement or, in the future, even get you out of a financial jam.
Investing helps you build your wealth too, helping your financial targets to be met and growing your buying power over time.
Although investing may create wealth, you would also want to balance the risk associated with potential benefits.
Markets can become volatile very rapidly, as the coronavirus crisis illustrated at the beginning of 2020. An investment may be good for the long term, but in certain periods, its price may bounce around significantly. For even longer, recessions will hurt investment values, meaning you may not have the cash you put into the investment soon (or ever.)
Top Investment Advice for Strange Times
What to Consider in 2020
From very stable choices such as CDs and money market accounts to medium-risk options such as corporate bonds and even higher-risk picks such as stock index funds, you have many ways to invest. That’s great news because it means that you can find investments that have a range of returns and suit your risk profile. It also means that to build a well-rounded and diverse portfolio, that is, safer, you can pick, choose and combine investments.
As long as they diversify, those with stronger stomachs and workers already building a retirement nest egg are likely to do better with riskier portfolios. A longer time period enables you, for instance, to ride out the uncertainty and take advantage of the potentially higher stock return. Be ready to do your homework and shop around for the types of accounts and assets that match both your short- and long-term goals though. If you are not sure about this consult with one for our investment advisors.
You can opt for lower-risk investments that pay a moderate return if you are trying to increase your wealth, or you can take on more risk and aim for a higher return. Or you can do both and take a balanced approach, getting completely secure cash now while still giving yourself the long-term chance for growth.
Top Investment Advice for Strange Times
Managing Your 2020 Finances
The uncertainty that surrounds almost everything in 2020 can make investing, for those new to it even more intimidating. It’s tempting to go the very safest route and stick to keeping the money you have put aside for savings in a simple interest-bearing savings account.
There’s nothing wrong with this, especially as the money can be accessed quickly and your risk of losing it is minimal. In fact, if there is one thing COVID-19 has taught us is that having an emergency fund socked away in an account like this may be a must.
However, if you put all your available money into an account like this it won’t grow very fast and if you are saving for retirement, you’ll miss out on the power of compound interest that other instruments offer.
In fact, if you only make one investment in 2020 it should be in tax advantaged retirement plan. Regardless of how old you are – and the younger the better – it is simpler than ever to do so.
The state is more than conscious of the fact that far too many South Africans are poorly prepared for retirement at the moment, and so they have made it possible for people at all income levels and levels over the past few years to take advantage of some fantastic tax-advantaged retirement plans for all ages, which can help them enjoy the retirement we all want – one that is financially secure – with minimal risk, even in COVID times.
Stock investments are still well worth considering as well. Markets around the world are beginning to recover and even making some impressive gains in some areas. For a new investor education and patience are still key to success in 2020 though.
In the end, a certain degree of risk will always be involved in investing money, whatever year it is. In many ways, it’s a form of gambling, only one that usually has far better odds if you’re careful than placing your savings on the blackjack table. However, this means that you will have to be able to deal with uncertainty. Getting spooked by all this, though, is not going to help.
To get some reliable advice, talk to our brilliant financial planners. And finally, it’s important to note that it’s OK to be anxious at the beginning, but it’s not easy to give up on the potential returns-and future financial benefits and prosperity-that are possible through sensible investments in 2020 and far beyond.