How do Investors Invest in Tough Times
Learning from the past is the key to getting ahead in the future
Observing post epidemic behaviour from countries like China and India, several brokerages have already gone overweight on life insurance stock, which is currently down quite a number of points.
Recently, we have all been hit by the reality of life’s uncertainties. This has, in the past, triggered people to consider protection from an unknown and potentially hazardous future.
Protection sales by life insurers account for just 8-17 per cent of their annual premium equivalent (or APE) but contribute 35-70 per cent of new business value.
Source:
economictimes.indiatimes.com/
Municipal bonds
An income fund is a mutual fund or exchange-traded fund (ETF) which pays dividends to shareholders. Investors use this type of investment to create an income stream from their investments.
A tax-free fund is an investment with dividends that aren’t taxed. These types of tax-free income funds are usually the municipal bond funds.
Tax free funds, however, generally pay less interest, so they might not always be the better deal, depending on what tax bracket you are in.
To determine which investment is best for you, have your tax percentage information handy, as well as your investment percentages, and use this calculator:
calcxml.com
Although this page is designed for US usage, one could easily adopt this to their own country’s taxes.
An index fund based on the Nasdaq 100
This is a great choice for beginners who can quickly and easily invest in some of the biggest and best tech companies without having to pick the winners and losers or having to analyse specific companies. The risk however, is that since they are the best companies, they are more highly valued and more likely to fall during hard times. Are we currently in hard times? Is now a good time to invest?
An Industry-specific index fund
What industries have remained open during the lockdown? What are considered essential items? Rather than choose a particular brand or company, choose the general industry they are in. If the industry does well, then the fund will probably do well, too.
These are typically called Exchange-Traded Funds (ETF’s).
How about Gold? Everyone always says that gold is a good investment
Gold is definitely NOT always a good investment. In fact, the only time it was a good investment was back in 1970-71 and in early 2001.
Don’t believe me? Here’s the chart: macrotrends.net/
Don’t invest in something just because a billionaire did it
They can afford to gamble – you probably can’t. You don’t know their motives – maybe what they really want is another investment that is attached to the one in which they have invested. They may have bought into the parent company to get at the child company.
On the other hand, Warren Buffett and Berkshire Hathaway have just sold all their holdings in the four largest airlines American airlines – Delta, Southwest, American Airlines and United Airlines (marketwatch.com/).
Those airlines represent about 80% of the passenger miles flown in the USA. Was this really the best decision? Are we forever grounded? If their sell-off leads to others doing the same and the price of those shares drops, one might suggest watching the news and these markets very carefully. This could be a good time to buy into those stocks, because after all, we need airlines. They are an essential element to our lives, and this will not change. They could form mergers or get government bail-outs. Foreign airlines might buy into them. There is a lot that can happen, and one thing is for sure – we need airlines. But – if they all crash and burn and then resurface under another name, then that might not be so good.
Many internet philosophers and journalists are making future predictions based on what they think will be irreparable damage to our psychi.
However, most of us have only been inconvenienced for a few months, that is all. Negative doom-seekers are out there for every personality type – from paranoid to pathetic. There are also opportunity seekers, like Bill Gates, who want to use a temporary setback as an opportunity to popularise his ideas.
There is a lot of material and also a lot of confusion, out here in internet land.
Newsgate NY predicts that happy days will be here, again. Everyone is clamouring to go back to work and for production to continue. You might not see it, but inventors are planning and investors are waiting. We will get back to work (probably with a better attitude!); we will fly, we will vacation, we will go to the beach – we will soon do all those things, again.
