With the Covid-19 pandemic, people worldwide lost their incomes due to job losses. The financial market went into a bear market, resulting in new investors while existing investors took this opportunity to grow their portfolios. But, those who aren’t financially knowledgeable don’t know how to grow their portfolios.
Growing your investment portfolio can be intimidating, but you will be on the right track if you include asset allocation and diversification. In simple terms, don’t put all your eggs in one basket.
Read further to learn how you can grow your investment portfolio while we’re in a worldwide pandemic.
- Invest in Dividend Stocks
One way to compensate for lost income would be investing in dividend stocks to generate a passive income stream that can either be withdrawn or reinvested. Irrespective of the company’s stock price, investors will still benefit from regular dividend payouts.
When looking for companies to invest in, look for those that, irrespective of the economy, have strong balance sheets and can still generate stable cash flows. To mitigate risk, spread your portfolio across various sectors, as dividend payouts aren’t always guaranteed.
If you’re unsure of which dividend stocks to invest in, look to the ones that are listed on the Toronto Stock Exchange (TSX).
- Invest with an Online Broker
The Covid-19 pandemic has seen an increase in investors, especially young investors, as everyone doesn’t want to miss out on future returns they can gain after the bear market of 2020. This caused online brokers to see a surge of new registrations, and rightfully so.
Online brokerage platforms offer a wide range of products and services and allow you to spread your investments over various market sectors to reduce risk and diversify your portfolio. There are lower fees, you can monitor your investments in real-time, and transactions are immediate.
- Invest in a Tax-Free Savings Account (TFSA)
Introduced in 2009 by the Canadian government, TFSAs are to get Canadians to start saving throughout their lifetimes. Contributions, capital gains, dividends, and earned interest aren’t taxed and can get withdrawn tax-free. This is a great benefit as your earnings get compounded tax-free.
TFSAs are excellent investment choices for both the long and short-term investor, and earnings can get withdrawn at any time. However, it does get recommended to leave your investment to benefit at retirement. Another great benefit is that there’s no expiry date, and you won’t get forced to withdraw your money at a certain age.
- Invest in Exchange-Traded Funds (ETFs)
Exchange-traded funds (ETFs) are investment funds that allow you to buy a large pool of individual bonds or stocks in one single transaction. It tracks stock indexes such as the S&P 500, bonds, commodities, or grouped assets. Investors can profit through dividends and interest rates that get paid and make capital gains on the ETF.
ETFs are perfect for investors who want higher returns but lack financial knowledge. These investors can invest in recognized stock indexes without dealing with a company’s performance or stock price.
- Invest in Real Estate
Long-term investment to consider when growing your investment portfolio is investing in real estate. Investors invest in real estate for cash flow – your profit made after all expenses get paid. With inflation, cash flow will increase while your mortgage payments remain the same.
Like all investments, there are risks, such as dealing with costly repairs and maintenance. You will also need to take into account that you will be a landlord.
There are several ways for you to grow your investment portfolio during the Covid-19 pandemic. Stick to diversifying your portfolio across various assets and seeking investments that offer passive income, such as dividend-paying stocks.
There is an investment for every type of investor, so do your research before committing to an investment, and watch your investment portfolio grow!