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How to invest in the stock market during a recession? (U.K)
The world is currently in the mist of a virus epidemic which has created uncertainty in the stock market and caused a massive decline in share prices.
If you already had a share portfolio you would have seen thousands of paper losses as stocks plummeted over the past couple of weeks!
Is the world over or is this the greatest time to invest in the stock market??
I firmly believe this is one of the greatest times to invest in the stock market.
In the words of the great billionaire investor Warren Buffet
“Be Fearful when others are greedy and greedy when others are fearful”
“Observe the masses & do the opposite” says millionaire investor James Caan from dragons den.
This market crash is the perfect opportunity to heed those words of wisdom!!
When others are being fearful its your time to strike.
Stock prices are at a all time low, these bargain prices mean investing now should give you great returns in the future.
Timeline of Stock market crashes:
The stock market is no stranger to crashes, the global stock market sees a crash approximately every 10 years with four historic market crashes in the past century.
- From the great depression in the 1930’s
- To the Dot Com Crash in the early 2000’s
- To the 2007 credit crunch and 2008 Financial Crisis.
http://news.bbc.co.uk/1/hi/business/8242825.stm
Market crashes have come & gone over the past 100 years and this one is no different.
Many great investors state that market crashes are the best time to buy.
But don’t just take my word for it.
Observe successful investors.
Warren Buffets investment firm Berkshire Hathaway, invested $45.3 Million in Delta Airlines stock as it crashed due to the corona virus epidemic.
https://www.investors.com/news/warren-buffett-raises-stake-delta-air-lines-stock/
Heeding his own words of advice he was greedy while others are fearful.
How can you take advantage of this situation?
While if you already had a shares portfolio you would have seen thousands of paper losses wiped from your account during this latest market crash.
However, this losses only become real IF YOU SELL!
The key is to NOT SELL during these times.
The simple fact is to BUY LOW & SELL HIGH! But as many people are very emotional they tend to SELL LOW & BUY HIGH!
So hold on for the long term as the market always corrects.
What if you have some cash to invest?
If you have some cash to invest then now is PRIME TIME! You can start investing from as little as £10.
There are a variety of FREE TRADING PLATFORMS which charge you ZERO fees and offer an extensive list of many great funds & shares to get you started.
TWO of my favourites are FREE TRADE & TRADING 212.
I will leave a link in the description where you can sign up & get a free share when deposit & sign up.
What should you invest in?
Now I am not a financial advisor & you should assess your own personal circumstances.
However, having said that I will tell you my method of selecting companies to invest.
I follow the same strategy as the greatest investor in the world, warren buffet.
He observes companies with the following:
- Great Cashflow & Strong balance sheet
- Market leaders in there industry such as Coca Cola, Microsoft, Apple, Google,Amazon.
- Low Debt which makes them more able to withstand recessions & crashes.
And last but not least the most important investment right now.
- Buffet selects companies which are BELOW MARKET VALUE.
Buffet compares the stock market to a bipolar person who wakes up every morning feeling different & the slightest issue can send him into a deep depression.
This can cause some companies to be wrongly undervalued, but as the market corrects there true value is seen.
Which are the best investments for beginners?
But remember don’t follow what I do because I could be wrong & the timing I purchased shares will be different to your purchase.
instead follow my method.
THE FIRST & MOST SAFE INVESTMENT I did was in a INDEX FUNDS.
INDEX FUNDS are widely regarded by many professional investors as the safest, most passive & lowest cost form of investment.
These funds have even been known to OUTPERFORM many professional investment firms.
So if you want somewhere to put your money and forget about in then an Index fund is for you.
If your in the U.K The FTSE 100 ETF offers a diverse Collection of the top 100 companies in the U.K
The FTSE 250 offers a list of top 250 smaller companies in the U.K.
These are at historic lows right now so are great investments to start off.
For worldwide diversification,
You should definitely check out the S&P 500 this is the top 500 companies in the USA which is the worlds biggest economy so it makes sense to have some exposure to this.
The S&P 500 will give your investment access to well known brands such as Apple, Google, Amazon, Facebook and many other large market leading businesses.
The S&P 500 has been on the longest bull market run in history which began in 2009.
Since then it has seen a 330% rise!! Which offered great returns for many investments.
However, it has been knowledge for a while that share prices were valued higher than earnings, so a market contraction was predicted.
Now due to this latest crash, the S&P 500 dropped to more reasonable level, still high but a crash will definitely give you an opportunity to get your foot in the door.
Index funds are the best place to start for anyone looking to take advantage of the investing opportunities.
So feel free to use the link below for a free share & to get started! Now is one of the greatest times in history.
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For higher risk investment’s, but with potentially higher rewards. You can also invest in individual companies.
During the next video I’m going to reveal my portfolio of stocks I’ve invested in during this latest crash. I am going to detail how I evaluated the companies and some useful tools to use.
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