Now that it has been three months since the lockdown has uplifted, business somehow managed to stabilize their condition and bring it to a much better position. And with the festivals on the door, it will be able to improve more. This improvement in the business condition has been rebuilding the confidence of business owners and creating hope that everything will be alright.
Hope and optimistic attitude in business, encourage it to do more better, causing business owners to get out of their shells, to nourish the financial growth of business for the future. And for this, they are all set to carry out investment activities with increased confidence.
Corrective investment measures should be taken to ensure the wellness of business health. Along with corrective measures, preventive measures are also crucial to safeguard the health of the business from uncertainties and, for this business, should go for calculated risk in response to its financial condition. So, here are the following investment tips for business amidst COVID-19:
- Analyze your financial records– The foremost thing to do is to understand your financial stability by analyzing the financial records. In the age of pandemic, you cannot afford to go illiquid, that’s why first fulfil the current financial needs, keep reserves and then plan for investment. Investment blocks the money for a while. So, confirm that you have a backup plan with you in case you need immediate finance.
- Take advantage of compound interest – Compound interest increases the amount of return much faster than the simple interest rate. The reason behind this is the simple interest rate you get the constant return on the principal amount but in compound interest, in addition with the returns you earn on the principal amount, you also get returns on those returns at the end of every compounding period.
Compounding period can be monthly, quarterly, half-yearly and annually. It creates the snowball effect where original investment plus the income earned on that investment grow together. The best compound interest investment includes bonds, stocks, treasury securities, rental home, REITs etc. Still, be careful of what rate you’re investing and what the period is; because sometimes compound interest tends to be more expensive than you realized.
- Diversified portfolio – Diversified portfolio refers to the distribution of assets in such a way that they mitigate the risk of other assets, to take a calculated risk. The prime manner of diversifying the portfolio is to focus on the beta of the assets as it tells investors whether the stock will move in the same direction as the rest of the market. There are three types of betas which are: negative, neutral and positive.
The negative beta (b<1.0) indicates that security is less volatile than the rest of the market. The neutral beta (1.0) indicates that the security is actively correlated with the market and the positive beta (b>1.0) indicates that the security is more volatile than the rest of the market.
- Focus on short term objectives – In such a prevailing condition, where there is uncertainty in every sector and even the financial position of the business is not as strong as before; it is outright irrational to focus on long term growth without creating a base for short term growth. This is not the time to go for the long term investment as the risk of high volatility intensifies. Besides, no one exactly knows what will be the aftereffects of the pandemic on market. Therefore, while investing focus on short term goals while keeping your investment liquid.
- Analyze the investment cycle – Before investing in the asset, including securities, analyze their investment cycle to determine the pattern in which they are reacting to the market. Every asset has an investment cycle and accordingly they fluctuate, even though the pandemic has caused great disruption in the investment cycle, still, it will be good to know the way they are reacting to the market and along with that focus on the reasons behind such fluctuation. If you conclude that by the time you will invest, the fluctuations are going to be more intense, then avoid going for that asset and look for the new one.
- Have adequate insurance coverage – The pandemic has shown us the significance of insurance to deal with uncertainty. Here adequate coverage means not only for the production unit and machinery but also for the workforce. Financial wellbeing, along with physical and mental wellbeing is requisite to sail through this tough phase. Needless to say, insurance eliminates the risk by transferring it in exchange for a premium. Thus transfer your risk and make sure that your organization has adequate insurance coverage.
- Create contingency funds – Sometimes, business owners do not create contingency funds before investment that can be dangerous for business integrity. At present, when the market fluctuations are more frequent, the contingency fund gives a sense of security against your investment. Unfortunately, in cases of financial problems or unforeseen situations like a loss in business, share market crash, this fund saves you from going into debt and can keep your company in liquidating position for some time. Thus, create a contingency fund because it is like internal insurance of the company.
- Avoid panic selling – Panic selling means sudden and wide selling of securities by investors because of a rapid decrease in stock price at a high volume. And this is exactly what some investors did and have been doing in the pandemic. Panic selling is more of an emotional decision than the logical one. As an investor, business owners need to understand that due to the decreased price you’re already in a loss, but by selling it, you will be in more loss. Remember it is the nature of security to fluctuate it cannot be constant always, so avoid loss by avoiding panic selling. The best way to avoid panic selling is to avoid everything for the time being.
- Seek advice – Don’t hesitate to seek advice from the financial advisors and experts. In the present time, the frequency of fake news has been increasing rapidly. Thus to have proper and correct information, it is best to go for professional financial advice. Pandemic has caused much uncertainty due to which the volatility of the market is higher than ever and don’t even ignore the ongoing economic recession. Thus under such intense conditions go and seek advice from the professionals.
The pandemic showed its existence when the global economy was already facing tough times, and now we are experiencing the global economic recession. Thus, for business owners, they need to be very careful with their investment decision, especially when the prevailing uncertainties are not helping either.
While executing your investment activities, do not forget the health safety of the one who is responsible for your business activities, your workforce and clients. Being an employer and merchant it is your duty to safeguard the health of your employees and customers.
The government along, with the local authorities has issued strict guidelines, but that is not enough because we humans lack self-discipline.
Hvantage Technologies understand the problem and we work towards finding the way, hence, we came up with the solution “H-Guard”.
“H-Guard” safeguards your health and safety by maintaining & monitoring social distancing and records the contacts to do proper contact tracing at your workplace. It is a wearable device connected to your phone via Bluetooth. The primary objectives of “H-Guard” are:
- Monitoring and Maintain Social Distancing.
- Contact Traceability
- To Control Community Spread.
Significant features of “H-Guard” are:
- App-Based Monitoring
- Real-Time Alert
- Alert History Reports
- Contact Traceability
H-Guard is a wearable device. Business owners can provide ID Cards or wristbands to the employees and tags to visitors.