During the last three months, we have experienced nothing as we have ever been around before. The effect of post coronavirus pandemic is piling pressure on financial markets around the globe, and many investors are feeling anxious. The International Labour Organization foresees the loss of 12 million full-time jobs in Europe in 2020. The sectors most at risk include accommodation and food services, manufacturing, retail, and administration.
But how is it affecting the health of your personal investments, and how can you keep them safe? Risk is all about how much you can afford to lose, and young people have an extended period. They can take more risks, and ideally, it is going to make a lot of money for them in the long run. As an individual investor, you only answer to yourself, as that is decades away. For young investors, volatility is the source of future returns. Young investors should take on as much risk as they can tolerate. Every year, some companies fail, but most are successful, and unlike the 2008 crash, this market crash was started by a global pandemic. Just because a company's stock price plummeted doesn't mean the company was in bad shape.
FAST INVEST survey showed that the main reason for the majority of withdrawals is the necessity of funds. 57% of respondents indicated, "I need funds at the moment," and only 8% is concerned with the platform's security.
Don't let panic influence your investment strategy. Because, time and again, we have noticed that the markets regain confidence and bounce back.
Take a look at market performance over the last century. There have been crashes, but each time, the economy rebounds, and the stock market expands. If you made it through 2008, you could make it through this.
In general, post coronavirus recovery offers us the opportunity to build more reliable and more equitable systems. The economic damage is temporary and transitory. It is essential to note that the fair value of a fundamentally strong quality portfolio does not change because of transient stress in its earnings for a few quarters. Now think like a regular customer:
Why are malls and shops filled with customers during Sales? Why are they empty during other times? Because we get the same goods at a lower price. Unfortunately, in markets, people do not follow the same basic rule. We panic when the market corrects and start thinking of the worst possible scenarios, while we should be investing more.