Investing or Not in a Time of Recession? Yes, and here’s why

The year we never imagined has gone by. While we’re still experiencing pandemic and lockdowns, the world somehow managed to find different ways of coping with this situation and find ways to make it more functional and a bit less depressing.

Technology helped a lot and advanced immensely, due to the increased need for online shopping, working, communicating with loved ones, etc. It means the trading market hasn’t stopped as well, especially if we consider the sudden growth of individual tech-related stocks.

The year was steady but volatile at the same time, and we witnessed immense changes during and especially at the end of the year. The question remains, should you invest now that we are expecting recession?

Start

The question in 2021 is if the recession is going to hit. It sounds rather insane since we experienced massive lay-offs and closure of small businesses. Some speculate recession will be forcefully caused to go back to zero if it makes any sense.

Recession or not, it is a smart move to invest. It is your choice what you want to invest in and how much, but we are here to give you some basics and guidance about what’s going on the market at the moment and what to expect. Money-saving is especially important during a recession, and investing is one way to do so. Despite what people think, trading is investing, not gambling. You gamble your money only if you act recklessly and don’t want to learn enough about money management. Having a goal is also essential. Write down why you want to invest and gain money? What is it for? Do you have something specific in mind? If you do, it will be a lot easier to focus, and you are not going to act impulsively as some beginners do, and then regret it. Our current world situation can be overwhelming, but setting your priorities can make it a bit easier.

Index Funds

We will mention mutual and index funds briefly, so you can research a bit more about it. Many beginners are fond of these two because you can buy various stocks, which gives you more chances to gain. It also means you don’t have to be under the pressure of always looking at the market, but you can visit it every couple of days and check what’s going on. Long-term investing seems like the right choice, since Bitcoin started to rise in December, and experts predict it will go up to $100000 this year. Even if it doesn’t reach the exact number, it will undoubtedly go up.

Build a portfolio

When you start trading, if you are worried that the market will become too volatile, a diverse portfolio is excellent since it can protect you from the consequences. This means you can have stocks from different market parts, but what is essential is that you can still stay within the safe zone the index fund offers. Pay attention to your age – this is not something to make you uncomfortable, but more stable when trading. Some say if you are in your twenties, you should take more risk, and if you are older, you should focus on bonds. Our opinion is to get educated as much as you can and check with your broker what would suit you best when taking your trading plan and goals into consideration. Be careful, but don’t trade if it’s boring for you because somebody told you you should go with more conservative methods. Same goes if you are young – don’t spread yourself thin and risk everything just because of the opportunities and the fact “you can always earn more”.

Cash is important

The pandemic will undoubtedly influence the market this year, and we expect it to be volatile more than usual. This is why having cash is what many recommend because you can avoid investment liquidating if you need money urgently. When a stock goes down, and you want to buy it, cash can come in handy. It is a precautionary measure, but a necessary one, as well. Volatility creates excellent and bad opportunities, and it’s good to be prepared for both, so you don’t end up making choices you will regret.

In conclusion

You should invest since you will be saving money simultaneously, with the right strategy and earn more by being patient. Remember, you don’t have to invest an immense amount of money, and don’t overwhelm yourself. Research, ask, have fun. And have your goal in mind. From there on, everything will quickly fall into place.