Posted 02 Jul 2020, Editor's Desk
Investment strategies to follow during a crisis
Many investors now fear that another recession is afoot, although most causes of recessions cannot be predicted in advance.
Before anything bad happens, it is a good idea to plan ahead and decide on your investment strategy in crisis. A recession does not mean that all investments should be put on hold; it just means that you have to do smart investment during a recession.
What is an ideal strategy?
There are contexts where the situations that are unfolding are similar to those you have faced in the past. In such cases, you have a fairly good idea about the outcomes that will ensue. In such situations, doing what you have always done, and expecting a different result might not be the best strategy. These situations are ideal opportunities for innovative action. However, when the context is something you have never faced before and your past knowledge is not helping you unravel the situation, it is no time to try anything new. Just fall back on your tried and tested strategies of the past.
We are in the midst of a problem that has not yet fully unraveled itself. We are not in a position to gauge the full impact of the coronavirus pandemic on the world economy. In these uncertain times, the best strategy is to stand where you have been standing in the past and to continue with the investment strategy you had before the pandemic broke out. This is not the time for taking new action.
Here are some quick tips to keep in mind:
1. Low-risk investment:
2. Focus on recession-resistant and non-cyclical industries
4. Dividend stocks
5. Investment in consumer staples in the equity market
For many people, the financial crisis is scary, but if you have a smart investment plan then it actually is a good opportunity to make money. So be prepared and make money in any crisis.