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The COVID-19 crisis has sent the
stock market on a wild ride over the past few months, and while volatility may
be a scary thing, it's not an unusual one. The reality is that this isn't the
first time the market has seen massive swings in the span of a few short weeks,
and with stock values still being relatively low, now's actually a good time to
invest in it. But before you put money into stocks, it pays to check these
important items off your list.
Make
sure your emergency fund is solid
Investing in stocks is a smart thing to do with your spare cash -- money you aren't using right now, but also don't expect to need in the near term. In fact, a good rule of thumb is to only invest money you don't expect to have a need for in the next 10 years. Sometimes, we don't realize we need the money we invest until it's too late and that cash is tied up. Rather than run that risk, do a thorough assessment of your emergency fund.
Investing in stocks is a smart thing to do with your spare cash -- money you aren't using right now, but also don't expect to need in the near term. In fact, a good rule of thumb is to only invest money you don't expect to have a need for in the next 10 years. Sometimes, we don't realize we need the money we invest until it's too late and that cash is tied up. Rather than run that risk, do a thorough assessment of your emergency fund.
Assess
your existing portfolio
Right now happens to be a good time to invest if you have the cash and are good on emergency savings. But before you load up on more stocks, figure out which ones you already have. If there's a specific segment of the market you're already heavily invested in, it could pay to look at different areas to better diversify. In other words, if you own a number of bank stocks, you might consider focusing on healthcare stocks right now, or auto stocks. And if you're really looking to ramp up on the diversification front, consider an S&P 500 index fund.
Right now happens to be a good time to invest if you have the cash and are good on emergency savings. But before you load up on more stocks, figure out which ones you already have. If there's a specific segment of the market you're already heavily invested in, it could pay to look at different areas to better diversify. In other words, if you own a number of bank stocks, you might consider focusing on healthcare stocks right now, or auto stocks. And if you're really looking to ramp up on the diversification front, consider an S&P 500 index fund.
Be
careful with hard-hit industries
Stocks can be risky investments in general, but right now, there are certain industries that are really feeling the impact of COVID-19 -- namely, airlines, cruise lines, hotels, and anything travel-related. we don't know what their recovery will look like, so make sure you do your research and focus on quality companies with strong business models and solid finances in spite of the crisis.
Stocks can be risky investments in general, but right now, there are certain industries that are really feeling the impact of COVID-19 -- namely, airlines, cruise lines, hotels, and anything travel-related. we don't know what their recovery will look like, so make sure you do your research and focus on quality companies with strong business models and solid finances in spite of the crisis.