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Wealth Diversification is Crucial, Especially During the Novel Coronavirus Outbreak

JP Buntinx
March 7, 2020

When a global panic ensues, there are certain precautions everyone must take. Taking care of one’s wealth and ensuring it remains protected are crucial aspects that can never be overlooked.

The Threat Isn’t Over

As the number of coronavirus patients increases, it becomes apparent that this may only be the beginning. Although some sources claim everything is blown out of proportion and no one should panic, it is never a bad idea to take some precautions.

Not just in terms of hygiene and sanitization, but also regarding one’s wealth. As the stock markets crumble, the time to diversify one’s assets is nigh. Even the US Treasury bonds are dropping to astronomically low levels in terms of yield. That is a clear warning sign of how this global pandemic is making its mark on the financial sector.

No one knows how the markets, bonds, and other investment vehicles will behave. Putting all of one’s eggs in the same basket during a time like this is virtually the same as throwing money out the window. Chasing profits is less important than limiting one’s risk exposure.

Wealth Diversification is key

Exploring the many different markets and trading vehicles is always a good idea. Getting complacent is a core reason why so many people lose money when investing. There are very few assets capable of generating a passive increase in value over time. Even those assets will see ample volatility during uncertain market conditions.

A few weeks ago, buying Tesla stock seemed like a good idea. Following the coronavirus outbreak, the stock price has plummeted by roughly 20%. This is primarily due to Tesla building cars in China, as well as a lower demand for these vehicles during the past month. Investors and speculators are very risk-averse right now, which can easily lead to major devaluations of stocks and other assets. 

A Long-term Outlook is Crucial

Traders who don’t have the stomach for market volatility should not be overly concerned. Diversifying one’s wealth into assets with a positive long-term outlook are always good choices. Such assets often include precious metals, cryptocurrencies, and certain stocks. McDonalds stock, for example, has only appreciated in value since the big dip in 2003.

Precious metals, such as gold, tend to retain most of their value over longer periods. Last year saw a big gold spike after years of seemingly sideways market momentum. Those who held out hope for a big price increase were rewarded eventually. At the same time, these traders never exposed their portfolio to major losses either.

Perhaps the best investment for the long term are cryptocurrencies. Bitcoin has yielded very solid gains over the past 11 years. Although a new all-time high may not be reached this year, there is still a lot of positive market sentiment. When looking at a 10-year investment plan, Bitcoin has tremendous potential to retain value and even improve one’s wealth. 

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