We have all been affected in some way by the COVID-19 outbreak. You might wonder whether now is an appropriate time to put your money into the stock market, or whether it is better to keep up with your regular contributions to a non-retirement investment account (also called a brokerage account) if you are bored but employed.

You may be questioning whether now is the right time to be considering investments such as looking at Forex trading markets. If you are, answer the following questions first:

Do You Have Any Extra Cash?

It’s probably not a good idea to invest money if you do not have any extra savings. If you are in a volatile market, taking advantage of a perceived investment opportunity by borrowing from your short-term goals is probably not a prudent move.

Do You Need The Money In The Next Few Years?

Years, indeed. If you invest cash in the stock market and expect to turn a quick profit, you’re gambling, not investing. It would be reckless to borrow money if you needed it to pay your (now delayed) tax bill, college tuition, or should you lose your job unexpectedly. 

Normal pre-virus household cash reserves should be 6-9 months’ worth of recurring expenses (food, mortgage, etc.) for one-income households, and about 1/2 that amount for dual-income households.

Financial advisors help individuals invest for their future, but those with excess cash have many options. When you spend a dollar, it’s important to think of all the ways to maximize the benefit you get from that dollar on a risk-adjusted basis.

Should You Be Paying Down Debt?

Consider paying down your debt or refinancing instead if you have high-cost debt. Those who have significant student loan debt should consider paying down the principal with extra cash. Refinancing loans with a high interest rate may also be beneficial to borrowers with a high-interest rate, but it may result in a shorter repayment term and higher monthly payments. Federal borrowers may be interested in taking advantage of interest-free conditions for their federal student loans, announced recently. 

Homeowners can benefit from refinancing their mortgage by lowering their monthly payments or saving on interest over the loan’s term. It’s not free to refinance a mortgage — closing costs are typically between .75% and 1%.

When the loan is relatively cheap, paying off debt may not be the right answer. If your mortgage has an interest rate of 3.5%, you might be better off paying it off early. Is your expectation of gaining more than 3.5% in the stock market on an annualized basis if you’re a long-term investor? Compared to some years (like 2020) you’ll do worse but other years (like the now-distant 2019) you’ll do better.

The current conditions in the financial markets do not determine when you should invest. It’s still better to remain invested than to sell before the bottom and get back in after the bottom.

As far as the economy is concerned, the good news is that things will eventually improve if you have the money to invest and the patience to wait. The key to investing through a recession is time, not timing.