Investment Strategy

How Should You Invest Your Money In Uncertain Times?

The ongoing uncertainty in the economy that has been fueled by the Covid-19 pandemic leaves one wondering not only how to best care for your physical and emotional health, but also for your future financial success.  To be sure, the world is experiencing an upheaval, which is perhaps the largest man-made economic disaster in history.  That invites a modicum of financial opportunism. However, it is incumbent on all of us to do what we can to protect our financial futures and safeguard our wealth in such uncertain times.

So where are the best places to invest money right now? It’s a tough question to answer given that we have never been in this situation before. Let’s take a look at a handful of ideas that might be appropriate for your investing dollars.

  • Consider Investing in Precious Metals like Gold and Silver: Gold, silver and other precious metals are among the best safe-haven assets to invest in during times of instability and uncertainty. Since the beginning of the global outbreak of Covid-19, the price of gold has held its value exceptionally well. In fact, the year-to-date value of gold has increased by over 13% at time of writing.
  • Cash is King: Some of the world’s most successful investors, like Warren Buffet, swear by taking long positions in cash. Cash on hand can help hedge against risk in the securities market and can reduce exposure to market corrections if they reoccur. Also, differentiate between cash on hand and cash in the bank.
    • Cash on Hand: While it will vary by individual, a ball park figure is to keep about 10% of your liquid assets in cash in safe deposit. Banks are slowly limiting the amount of money you can withdrawal at a time. While draconian scenarios like the great depression and the recent collapse of the Greek economy are not likely, it still begs one to consider having cash on hand to alleviate any potential short term hardship.
    • FDIC Insured Bank Accounts: Spread your money around in smaller amounts in FDIC insured banks. Never put more than $250,000 in any one bank, because the FDIC will only insure “$250,000 per depositor, per insured bank, for each account ownership category.”
  • Bet Against Commercial Real Estate: If it seems intuitive to you that very few have been going to work in an office building, wouldn’t it make sense that those who own and rent out those same office buildings might be in financial jeopardy? Commercial real estate could be in trouble. Billionaire investor Carl Icahn explained that the 2008 housing market bubble is happening all over again because of loans made to shopping malls and other retail centers in 2012. If you subscribe to this tenant and want to bet against commercial real estate, there are a few ETF’s that do just that. Direxion Daily Real Estate Bear 3x Shares (Symbol DRV) is the largest with assets of almost $20 million.
  • Jump on the High Tech Bandwagon: With much of the world’s workforce working from home, equities in the consumer tech and high-tech sectors have performed exceptionally well since the outbreak of Covid-19. You can invest directly in such stocks, like Zoom, Microsoft, and Slack Tech, or you can find an ETF like Cathie Woods’ ARKK that gives you exposure to this sector of the market.
  • Think about Firearm Companies: While this sector might not be for everyone, there is no debating that firearm companies have performed well during the Covid-19 time frame. Gun manufacturers American Outdoor Brands Corp. and Sturm & Ruger both posted double-digit month-over-month growth in April (14% and 17%, respectively).
  • Real Estate Rental Income: Rents around the country are at or near all-time highs, fueled by a lack of supply and from a certain degree of flight from urban areas. Generally during challenging times, more people are forced to rent, which could offer a great opportunity for investors looking for rental income from single family homes. Interest rates remain relatively low and a lot of people are hesitant to invest right now, which might provide a great opportunity to buy a rental property on the cheap and turn it into a cash flowing investment.

Although no allocation strategy is free from risk, there are steps you can take that may minimize your exposure to the stock market and inflation risk. During a global pandemic, it’s especially important that you consider these options so you can accelerate your financial recovery afterward.

Investment StrategyWealth Mgmnt