Investment is like gambling. The more cautiously you play, the better results you receive. Though the pandemic has been hard on almost all industries, the history of the stock market has taught us that it is buoyant and rebounds as quickly as possible.
It might sound intimidating that the COVID-19 pandemic is a golden period for investors, but sometimes taking risks offers huge potential for profits in the long run. Here are a few points that suggest the benefits of investing in a pandemic.
Resilient stock market
The stock market is volatile and plastic at the same time. Investors should take notes from the history and track their moves accordingly. For example, during the Zika virus outbreak, the Sensex saw a tremendous recovery of 24.1%. Warren Buffet shares and cryptocurrency investment is seeing an amazing high in the current times.
Quality stocks are now available at a great low price because valuation is suffering changes due to a heavy sell-off happening worldwide. Such stocks guarantee sufficient return of investment( ROI) and are more stable in the market.
With digital advancements during the pandemic, tech stocks have substantial profit offers in the coming future. The IT sector will flourish because of the increasing cyber threats and requirement of business network security. Have an eye on such stocks and grab them as soon as the ball is in your court.
The entertainment industry of Netflix and amazon prime also is a good investment zone because of the increasing demand for home-based entertainment in the decreased culture of cinema halls.
Real estate investment
This particular sector has seen a huge surge in demand for residential property. The previous year has emphasized the importance of homeownership. The lockdown and work from home culture have fostered the property demand.
Few things responsible for increased investment are listed as followed:
- Reduction in stamp duty from 5 percent to 3 percent by Maharashtra and Karnataka government,
- Schemes by central ministry such as credit-linked subsidy scheme,
- Decrement in housing interest from 8 percent to 6.65 percent by Reserve Bank of India
- Extension of loan moratorium
- GST waivers
- Heavy discounts
All these beneficial proposals had attracted customers in huge amounts. NRIs have now acknowledged the smell of home soil and invested in property in India. Some have opted for residential communities for old parents, and some have set up plans for the retirement years.
The transparent payment mechanism, the stable value of the Indian rupee against foreign currency, and increased ease in customs duty has facilitated the process. The virtual tour of the property by three-dimensional computer technology has augmented the communication and enhanced the trust and security for the people investing from a different country.
This pandemic is the right time to invest in property because everything may reduce, but the population and roof for the family will always be mandatory. Due to the fear of the unknown, the market is going through low rates, which is a one-time opportunity to buy the properties that could be put on lease or sold afterward.
Reduced oil prices
The lockdown and flight bans resulted in low oil consumption and, therefore, a reduction in the prices of the oil. Many sectors had benefited from this scenario, such as transportation, airlines, the travel industry and automobiles.
The aviation and transportation sector are direct oil consumers and hence witness the rise in stock gains. The travel sector, though, did not see an immediate profit, but as soon as things were normalized, there was an increase in car sales.
Invest in mutual funds
A systematic investment plan (SIP) and systematic withdrawal plan (SWP) is the first chapter of investing in mutual funds. Few mutual funds to invest during the coronavirus crisis are:
- Overnight funds: These are the safest kind of debt funds that do not carry high risk. These deal with securities that mature in a short period of a night. They carry zero interest rates and the least credit risk. Also, overnight funds can be easily cashed out in times of crisis.
- Index Funds: Categorised under equity funds, index funds offer huge returns as they track the performance of the financial market that comprises the stocks of prominent companies of the BSE or Nifty. These acquire the same asset as that of the one they are tracking.
Presently, the market might be at its lowest, and so will be these funds, but as the virus will decline, these stocks will again rise up, and so will the index fund. And that is where the profit will begin for the investors.
It is more than ever important to strengthen the medical infrastructure. The second wave of the virus has confirmed that we are not yet equipped with sufficient amenities. The pharma companies and the vaccine makers are the game changers in today’s market.
It is a good time to raise your bet in this sector of biotechnology, medical equipment, pharmaceuticals, diagnostic labs, health insurance companies, medical hospital chains, and research and development institutions.
The government has also incentivized investment in the medical industry to boost the supply chain and ensure better healthcare management.
Market of essentials
2020 is a shred of living evidence of the upscaled sale of essential commodities. When everything was discarded earlier, then the masks, sanitizers, groceries, and only basic accessories were in demand. This came as an opportunity to small and medium enterprises that self-manufactured the products and helped the nation become Atmanirbhar Bharat.
The E-commerce sector prevailed throughout the pandemic and strengthened the economy. It should be a lesson learned by budding investors to be on the lookout for sectors that are resistant to changes that a virus can bring in global economies.
Therefore, invest in such a business that will remain essential no matter what. It is mandatory to have a continuous cash flow in the market for establishing an uninterrupted supply chain of products and logistics.
Resiliency is the key, and no matter how hard the crisis is, we should not let go of it to waste.