The pandemic has forced us to take a hard look at our lives and our finances. We have seen stock markets crash, businesses close their doors and people lose their jobs. It was surely a time of great uncertainty, but depending on how you see things, it was also a time of opportunity.
Many have learned how to take care of their mental health, how to invest in cryptocurrency, how to use new technologies for communication and more! These people believe that the way to coming out of this pandemic stronger is by learning from past mistakes and making some changes. With COVID in our rearview, we will discuss four investment lessons that it taught us.
1. Don’t panic.
‘The only thing that is certain in life is death and taxes.’ This quote by Benjamin Franklin has never been more true than it is today. The key to facing an economic crisis is to not panic when they happen and to have a plan so you can weather the storm.
When the stock markets started crashing, many people panicked and sold their stocks at a loss. This only made the situation worse and caused the markets to drop even further. If you had held on to your stocks, they would have eventually recovered. In fact, if you had reinvested your dividends, you would have actually made money in the long run.
This is one lesson you can apply to different aspects of life—don’t panic when things go wrong, stay calm and think things through.
2. Diversify your investments.
During the pandemic, we saw some stocks perform very well while others crashed. If you had only invested in one or two stocks, you would have lost a lot of money.
However, if you had spread your investments across a variety of stocks, you would have been able to weather the storm. This is known as diversification and it is one of the most important things you can do with your finances.
3. Have an emergency fund.
When the pandemic hit, many people lost their jobs and found themselves in a difficult situation. If they hadn’t had an emergency fund, they would have been forced to take on debt or sell their assets at a loss.
An emergency fund is money that you save specifically for times when you need it. It should be enough to cover your expenses for at least six months. This will help you avoid financial disaster in times of crisis.
4. Invest in your education.
It is more important than ever to invest in your education. The more knowledge you have, the better equipped you will be to take advantage of opportunities.
During the pandemic, we saw many people lose their jobs. On the flipside, we also saw many people—those with enough knowledge and determination—start their own businesses. If you want to be successful in life, you need to continue learning and growing. Never stop educating yourself. It would pay off in the long run.
These are four of the most important investment lessons that we learned from the pandemic. If you apply them in your life, you will be much better off financially. Remember, it is always darkest before dawn. Stay strong and never give up!