Why CONVID-19 is Your Perfect Start to Investing

Why CONVID-19 is Your Perfect Start to Investing

We live in uncertain times, folks. With the current COVID-19 situation unfolding globally, Americans are seeing once stable pillars in their day to day lives collapse in on themselves. One of the more prominent pillars of livelihood would be our economic state, or more specifically, the state of the stock market.

Less than 1 month before the first confirmed case of COVID-19 in the US, we were seeing record high values and massive gains from major players in the market, now most of those stock values have plummeted from their peak value, with some dropping as low as 40% from prime valuation.

Disney's values have fluctuated from $140.37 a share on February 20th, 2019, to its current share price of $89.94, including a surprising drop this past week to a flat $80.00/share on March 18th.

Westwood Holdings (WHG), known for its massive dividend yields, had its comfortable share price of $21.76 cut in half from March 10th, to March 18.

Now, this information might be scary, especially if you've never thought about investing in stocks, but have no fear, I'm going to walk you through how and what you should invest now that the market is currently riding low.

Why should I invest?

As you can see from my examples above, the current pandemic has had a major impact on most American's investments, even in a short period of time. Now one thing to note if you've never paid attention to the market in detail, It is ALWAYS changing. It has high highs and terribly low lows. It's an ever-changing game of chicken with your money. Will you play the short game by doing your research, budgeting your deposits (more on that later), and monitor your earnings hourly, only to find that all your time and energy has earned you a negative return? Yes. Will you play the long game (we're talking years here) and watch your manageable, consistent investments over time build to a profitable sum? Also yes...sometimes.


In simple terms, the market is incredibly hard to predict but as history has shown us, people often react to what's happening at the moment. Market shares are currently dropping partially because your average investor is watching all his fellow Americans panic and buy toilet paper and he decides to sell all his Disney stock for two reasons:
1. Go cash-heavy and have as many accessible funds as possible.
2. Cut any potential losses before they decrease further in value


The "why" you should invest is pretty cut and dry, the market is down and sooner or later, it will go back up. Upon seeing Disney's share value drop, people decide it's better to cut their losses and pull out now before the value drops further, therefore continuing Disney's share value plunge via the laws of supply and demand. This is why I would encourage any potential first-time investors to take advantage of this "clean slate" on prime company shares. Even consistent growers and dividend-paying powerhouses are experiencing record lows, so getting in on these blue-chip stocks now could result in sizable returns as the market recovers.

How should I invest?

Now let's be clear, I won't be providing you with a specific dollar amount to put into an account. Rather, I will be providing you with a few key guidelines to follow while determining how to execute your first round of investment.

Guideline 1: Budget

A good chunk of Americans utilize some form of budget in their daily lives as it allows for easier financial planning and provides strategic ways of paying off large debts. That's why I would caution that if you're looking to invest for the first time and you don't have a personal budget, make one. You'll be grateful in the long run that you took the time to ensure you didn't spend money you never really had. A general rule of thumb for first-time investors is to avoid investing money you may need within 12 months.

Guideline 2: Do your homework

Buying shares of a company may be much more convenient thanks to modern technology, but in reality, this "ease-of-use" can trick new investors into simply throwing their money at stocks that change in ways they don't understand. Think about it, you wouldn't just hand your money to some guy you didn't know just because he said he could double it. Same principle here. Learn about the companies you invest in, learn their habits, decisions, leadership, values, etc. Learn about the platform or method you're using to carry out your buying orders. You can never learn too much about where you're putting your funds.

Guideline 3: There's no such thing as "bad" growth

Take your first round of investing seriously even if you only see minimum portfolio growth in the first couple of months. If you purchase 10 shares of a company for $10.52 a share ($105.02 total investment), and in 4 months time those shares have risen to $17.89 a pop, you will have experienced a 70% growth over those 4 months, meaning you've gained about $75 total in those 4 months. That may not sound like much, but the key is to avoid associating small initial trades with poor performance. Growth in the market is good, no matter how you slice it. You may not be achieving the numbers you thought you would, but in a shifting market, those $75 growth spikes should be nothing but a win in your book.



For more information, tips, and tricks on investing, I recommend checking out YouTube personality and investor Andrei Jikh. For a good launchpad into investing, I recommend starting out on Robinhood. It's a commission-free, easy to use platform that teaches you how to safely and wisely invest your hard-earned cash.


Until next time,

Colby