How to invest safely during the corona crisis?

The current cornona crisis is not only confusing the whole country. The global economy is also suffering tremendously from current measures. People are out of work, companies are making tons of losses, and the stock market is more volatile than ever.

Now that we are in the midst of a global crisis and the collapse of the current stock market, how can we best proceed?

The markets have been extremely volatile in recent weeks. Fear is unchecked. Investors are driven by stress and bad habits and make unwise decisions when it comes to their finances.

As a smart investor, you have to keep a cool head, be smarter than the masses and continue to invest sensibly. In this article you can read how.

Tip: If you are a beginner and want to learn more about investing? Then click here.

First, it makes sense to think of the current situation and the panic caused by the coronavirus in terms of gradations, not definitive and independent events.

Nobody knows how this crisis will develop. However, we can say with high probability that the future will play out according to one of the two following scenarios:

A. The optimistic scenario: the coronavirus will have subsided within a few months due to current prevention efforts and the possible development of an effective vaccine. We are avoiding a full recession, and most companies will recover by the end of the year. Markets are stabilizing and investment returns are returning to normal.

B. The gloomy scenario: the consequences for our society are much more severe than we had originally anticipated. The global economy is entering a deep recession that will last for several years. This recession is accompanied by a large number of companies going bankrupt. The earnings of many other companies will be negative in the coming years. Stock markets have been in a downward spiral for years before stabilizing again and producing normal returns.

Now the next question arises, "These are two very different scenarios. How can I prepare for both?" Let's take a closer look at this issue.

Speculators focus on their ability to predict specific future outcomes. Investors, on the other hand, need to choose a strategy that works for the full range of outcomes and create a portfolio that meets their financial goals, regardless of the future.

Let's be clear: preparing for the full range of future scenarios is not costless. That means you'll have to trade some of the potential gains that a more aggressive strategy would yield in the optimistic scenario for a lower return to significantly reduce the negative impact of the gloomy scenario, should it occur.

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