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The COVID-19 outbreak followed by the lockdowns and restrictions to control the pandemic has drastically impacted the markets. Except for a few industries, other businesses have been running in losses for over a year.

Such massive economic impact has resulted in an already unpredictable stock market turning volatile. The market often witnesses fluctuations and takes unexpected turns, but matters have become worse in the current time. Hence, there is uncertainty about the valuable investments made by investors. 

Nevertheless, nothing shall stop you from making investments. People need to overcome their worries and continue to invest in the market to get desired returns. It would potentially come to good use to cope up with any emergency during this global pandemic. All one has to do is tweak their investment strategy as per the prevailing situation.  

Let us look at some of the ways to keep your investment game strong during the COVID-19 pandemic. 

Diversify your portfolio

It is one of the best ways to strengthen your investment during a pandemic. Diversification helps in reducing the risks involved in the market. As investment is made in various asset classes like equity, gold, bonds, etc., the risk of market volatility is less.

People can also diversify their equity portfolio across sectors and market cap. The stability that comes with a diverse portfolio is a boon because the chances of all the investments performing badly at the same time are considerably low.

Further, the maintenance and time-consuming monitoring process is not needed in the case of a diverse portfolio.

For those who are worried about their savings, diversification is a wonderful option as it safeguards savings and enables the investors in attaining good returns. 

Invest for the long term

Investors should not panic with short-term volatility. They should always keep their financial goal in mind and invest for the long term. This lets their money grow for a longer time via compound returns.

Long-term investments reduce people’s expenses on trading fees. For instance, an individual has to pay trading fees each time they need to invest. So, to lessen this fee, it is better to invest for the long term and get good returns.

It must also be noted that stock takes significant time to attain the peak, and it must be given sufficient time to grow through long-term investments.

Further, the risk of loss of investment is much less in it. 

Rebalance your portfolio

Investors should review their portfolio and try to realign it with their short-term and long-term financial goals. If a person has any short-term goal maturing within one to two years, they can book some profit from the equity portfolio and invest the amount in debt instruments.

Besides, rebalancing the portfolio plays an important role in managing risks by asset allocation. By keeping a watch on the portfolio, people can make necessary modifications to their asset allocation, and thereby reduce risks.

It would be correct to say that rebalancing helps manage the risks of the market. Besides, portfolio rebalancing gives you assurance that your financial advisor is assisting you in following a suitable plan for a particular investment.

Additionally, portfolio rebalancing at certain intervals depending on the changes in the market condition can help in the reduction of losses. As a result, your investment goal can be attained.

Hold some cash in your portfolio to buy during dips

Having cash is true of utmost significance to deal with any kind of emergency. Moreover, it must also be noted that it is quite advantageous to hold some cash in the portfolio as it enables an investor to react instantly and derive the most benefit from an opportunity arising out of an investment.

Availability of cash empowers a person by helping them to buy stocks during dips. Furthermore, cash holdings have the potential to allow a person to tolerate volatile or risk situations. 

Therefore, by adopting the above-mentioned investment strategies, investors can benefit a lot, even during the COVID-19 pandemic. Besides boosting the confidence of the people about their investment game, these strategies encourage more new investors regardless of the prevalent situation. 

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)