Question

There is discussion now that the new fed chairman has a very loose/liberal money policy given the COVID 19, what do you think would the effect of such policy on the time value of money and value of stocks versus bonds. Would you be interested in investing more in stocks or bonds as a result of such a policy and should that be a function of your age?

I'm between 18 to 25. please provide at least 200 words.

Answer 1

I am also the age of 25 ,due to covid19 everything is lockdown, company are cutting job to minimizes losses, filing bankruptcy and raising working capital to stay afloat in the market. With the uncertainty in the market, it’s the time to control the emotions in investing in the market. The value of the money is going decreasing every day and people are in making losses. In that situation and in that age best things are to stay away from investing in the stock.
As a well-wisher and student of MBA finance, I have done detailed analysis which is the best investment source in this pandemic situation are detailed below:-
If you have money wants to make investment for future say short term plan 2-5 years go with Debt instrument i.e. Bonds which is secured compared to stocks or safer instrument like fixed deposits, on convertible debentures. These types of investments which will be pay your interest and it’s secured by the assets. Chances of defaulting your money are very less.
Stocks can give your better return and time value of money is also good, the situation is that it’s not the time to gamble with the money. So better invest in the bond which will give at least decent return amount of money.
You can invest in Gold Bond, it’s seen that whenever there is a panic situation in the market, Investor Park their money in the gold type of investment. Gold is known as safer investment and now gold price is also increasing.
With the fed policy announcement I would recommend to invest 50% money in bond and 50% money in your saving for take care your day to day expenses, because situation is uncertainty.

My only advice is that don’t run behind investing money in stock market, if you have surplus money allocated your money invested in bond market and keep emergency fund. And analysis your portfolio with portfolio manager in a 6 month, to ensure it is well aligned to your objectives of risk and return.