The world faces different types of crises from time to time. In some cases, the crisis could be a global crisis such as the recent COVID 19 (Corona Virus) pandemic outbreak while in other cases it might be a national crisis that is limited to a particular country alone such as a national recession. Many undesirable situations arise during a crisis. The economy of the country could be threatened, and the prices of goods could fall or increase, depending on the type of crisis. However, a crisis will almost always hurt the economy of the affected country and the nation’s stock market is likely to fall even to the extent of crashing. This article will discuss if it is wise to invest during a crisis.
Generally, it is wise to invest during a crisis due to some reasons. The reasons why it is wise to invest during a crisis are discussed subsequently.
Your money can buy more
When there is no crisis, companies that are doing well will have a particular stock market price and the same with those that are not. You could buy during this period, but you would be buying at a normal price. However, in the event of a crisis, their stock market price could fall depending on how much the economy was badly hit. You can be sure that the crisis will end at a particular point in time. When the crisis ends, companies that were doing well will pick up again, even if it takes some time. As they start to do well, their stock market price will return to normal and the implication will be that your money too will have added value. The difference here is that the amount that would have only bought you 500 units of shares when there was no crisis could have bought you between 800 to 1000 units of share during the crisis. However, before you invest in any trading platforms, you should read reviews about trading platforms to know which of them were profitable before the crisis to know which of them will find it easier to survive the crisis and go back to profitability after the crisis.
It could improve how quickly the crisis ends
One of the reasons why crisis periods are often harder on the economy of affected countries is due to panic. A lot of people withdraw money in huge quantities to either keep at home or to buy what they would need to survive during the period of the crisis. In some cases, they are advised to do so by the government, especially when there is the need to institute a lockdown of parts or all of the country. Thus, if it was an economic crisis, the country will find it harder recovering from the crisis because their citizens are hoarding money that the government could have utilized to get things to normal. However, if a significant number of people invest during a crisis, there would be money available to organizations and the government to carry out activities to solve the crisis. With the right amount of money and the right policies, the crisis would be over within a short time. Immediately the crisis is over, the value you invested would have added value as things normalize and then would continue to add value over time.