While COVID-19 is primarily a health issue, it cannot be denied that it is also a financial matter. In fact, as the impact of the virus expands globally, the international stock market is trying its hardest to cope. One might wonder if it is high time to withdraw stocks.
As of March this year, undeniable large drops and mass layoffs have already been recorded in the market. Knowing this, it’s easy to observe that COVID-19 is having an unprecedented impact on the financial scene.
So, we have compiled a few of the most common reasons why cashing out is the best decision to take. From securing your assets to avoiding financial woes, here are the advantages you can get from getting out of the stock market during the pandemic.
Reasons To Cash Out During A Pandemic
Avoid Further Losses
Perhaps, one of the main driving forces for why people choose to cash out during the crisis is the desire to avoid further losses.
Essentially, since stock prices are influenced by the current condition of the economy, corporate profits are expected to collapse during times of turbulence, such as pandemics.
To date, as the spread of the novel coronavirus raises market volatility, it is only natural that stock prices are plummeting as a result. Knowing this, turning to cash will help you flee to safety.
Ditch Financial Anxiety
For investors, in particular, a market crash could be mental torture. Specifically, since balance in brokerage accounts can neither be seen nor touched, it’s easier for investors to go through financial anxiety as news about market volatility persists.
Now, as the spread of the COVID-19 continues to take the stock market on a downward ride, you are more likely to feel anxious and worried about the possibility of losing your life-savings.
When this happens, withdrawing from the stock market will help you somehow achieve comfort and relief.
Generally, since cash can be seen, touched, and kept in your own pocket, carrying it in times of pandemic will give you emotional security that can help lessen your financial worries.
Response To Urgent Financial Needs
During a pandemic, anything can happen. From having to face urgent medical expenses to responding to important major purchases, there is a list of possibilities that may strike anytime at the height of the crisis.
With this in mind, withdrawing from the stock market and turning to cash will help give you immediate financial sources when the unexpected happens.
Normally, since a global pandemic and chaos can leave the stock market running at a slow pace, you cannot expect that your balance in your brokerage account can immediately save you from emergency situations.
On the other hand, holding cash can provide you with an immediate solution when a problem arises.
The Bottom Line
Surely, it’s a common knowledge that investing comes with its own set of high risks. During times like this, when the public suffers from a global health crisis, weighing your options will help you determine the right path to take.
From the swelling number of patients to slumping oil prices to global layoffs, it’s easy to find yourself spooked about the future of your investment. Know that withdrawing from the market is one of the safest options to bet on.
Still torn on what to do? To ensure that you’re making the right decision, feel free to consult with your financial advisor today!