The global markets are entering a crisis right now with the effects of the coronavirus pandemic stirring up the industries.
Markets are now seeing double-digit swings and finding a safe place to put your money in may be more difficult.
A fifth of the value of the S&P 500 has been erased in the 1st quarter alone. With today’s uncertain times, it’s more important than ever to find a cash buffer to get you through the coming months. In a plight to achieve this immediate course of action, people are now scratching their heads on where to look for returns.
Investors have divided views on the market outlook. Some think that the U.S. government signing a stimulus bill worth $2.2 trillion can be a sign of positive things ahead. However, some believe that there is still a further fall.
Financial experts are also not unanimous in their views. Viewpoints range from the concerned to the cautiously optimistic. Digital wealth manager StashAway’s chief investment officer, Freddy Lim, says that the data available right now is pointing to a short-term market crash instead of a bear market. Meanwhile, Samuel Rhee, who works as the chief investment officer of digital financial advisory Endowus, sees the US’s policy response as a pivot point.
Although their views may differ, they are one in the notion that now is a good time to pounce on investment opportunities. Rhee says that long-term returns can result in these terrible circumstances.
OPPORTUNITIES FOR INVESTING
For those who already have interests in the market, hold your nerves and continue your contributions. For new investors, get your foot into the door while the assets still look undervalued.
During the last major economic downturn aka the global financial crisis, those who didn’t cash their investments in the S&P 500 saw double the returns. This is based on data from CBOE and Syfe.
The data, according to Syfe CEO Dhruv Arora, also highlights the benefits of staying invested over a long period of time. Arora also advocates diversifying your portfolio with these asset classes.
In recent weeks, stocks have been struggling amid the uncertainty that the pandemic has caused. However, financial advisors agree that stocks are still attractive investment options as a lot are trading below the trade value.
DBS Bank chief investment officer Wey Fook Hou believes that equities are the way to go. This is especially true for stocks related to U.S. e-commerce, millennial consumption, and health care.
Standard Chartered Private Bank chief investment strategist Steve Brice says that there will likely be a surge of healthcare and technology stocks after the virus and containment efforts like working from home. Although, Brice believes that there may be even better entry points as the crisis unfolds.
These fixed-income assets still look attractive since their returns are inversely correlated with the interest rates. With interest rates falling right now, bond yields are expected to go up.
There has been a reset in the bond market after dislocations and monetary policy responses. Rhee says that it’s good to remain invested in this defensive asset class. Brice expressed his agreement and highlighted Asian USD bonds and the emerging USD government bonds.
To further diversify your investment portfolio, you can put your money into real estate and commodities. Rhee says that gold is a good pic as it offers a hedge against the US dollar. However, the allocation should be minimal since it’s a zero-yielding asset class.
HOW TO GET STARTED
With the current situation, markets are expected to still be volatile after some time. But, advisors have agreed that now is the best time to start investing. To get yourself a headstart, one of the simplest entry routes is to have a digital wealth manager or passively managed index funds. Rather than immediate financial needs, it is recommended to focus on long-term goals.
Start out small, understand the risk profile, do due diligence, and stay diversified, are what DBS’s head of financial planning and personal investing, Evy Wee recommends.
We don’t know for certain how long the pandemic will last, so spread out your assets and don’t invest your cash in one thing at one go. Always keep in mind the long-term approach.