All posts by ritefinance

Everything about personal finance. Financial Literacy Matters!

Why I Invest?

I Invest, because,

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I have Extra cash

I believe in power of Compounding

I don’t like to Spend

I don’t like to Save

I love Investing

I like the way Money grows Money

Uncle Sam told me

My Dad used to do it

I love Assets

For Financial Independence

For my Future

For my Kids

For my Livelihood

For Retirement

Just to grow Wealth

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While I can go on and on, the point is there are plenty of reasons to Invest! And the earlier you Invest the better it is!

So, In case you have not yet, Invest Now!

Further articles that you can read –

Thank you for reading 🙂

5 rEASON TO iNVEST IN cRYPTO

Hellow Riters, Hope you are healthy, hope you are doing great! Today lets discuss about those Adas and Doges’, I mean Cryptocurrency. So, lets dive in.

Token to Freedom

Cryptocurrency is your token to freedom, You and only you are its owner. You have full control over where to spend it when & how, no Government or Bank can control it, no Govt. can block or freeze it. Demonetization, hyper-inflation and other risk factors due to the Central System are not present.

Safe Money

Probably the best reason to own a Cryptocurrency is the Cryptography behind it. It can’t be forged or attacked, also your identity is hidden, encrypted and safe. Blockachain technology ensures secure digital transactions through encryption and “smart contracts” that make the entity virtually unhackable and void of fraud.

Accessibility

Anybody with access to Internet can access the crypto, and use it. Even the people who don’t have rights to use to traditional exchange systems can access it.

Higher returns

Even though Cryptocurrency prices are volatile the returns has been way higher than the traditional Stock markets. Also several organizations like Blockfi provide you Interest over your Crypto assets. And the high liquidity of this asset makes it worth investing at least a little portion of your portfolio

Instant Settlement

With Blockchain, all you need is an internet connection and a smart device to instantly become your own bank making payments and money transfers. Also coins like Ripple (XRP) empower cross-border settlement and currency exchange in real-time by allowing banks & money-transfer institutions to join their distributed ledger network.

Bonus – The other unique reason to own a Cryptocurrency is the uniqueness it brings on the table. Each coin is separate in its functionality and usuability, like Ripple is used for cross-border settlement, Bitcoin can be used as Gold to store wealth, Ada (Cardano) can be used to build smart contracts and in turn create decentralized applications.

To Know more about Cryptocurrency do read our Beginners’ guide to Crypto!

Thank you for reading.

unusual Investments

You would have heard a lot about Investing in Stocks, Real Estate and Gold. But have you ever heard about the not so common Investments, the Investments that not everyone knows about? Perhaps, they are worth exploring too, lets peak into some.

1 . MLPs

Master Limited Partnerships (MLP) is a unique Investment that combines the tax benefits of a limited Partnership with the liquidity of a publicly traded stock. MLPs may be a business pertaining to natural resources (like petroleum), commodities or real estate enterprises. Read more here.

2 . Wine

Wine bought at a fair discounted price and kept to age, can give good returns as Vintage Wine down the line provide you have a climate control space and enough will power not to drink your Investment. But to Invest in, it only makes sense if you are a connoisseur of wine.

3 . Classic Cars

Cars, OMG!, You are saying a liability can be an Asset? Cars are an Investment? Don’t they depreciate in value?, well hold on, pause, breathe…

Buy a Car and let it rot, well not exactly, if you are into Cars, buy a Vintage Ford, Ferrari or a Car which will potentially be replaced by a better variant while the Old becomes Gold. Down the line find a crazy car lover like you who will appreciate it for its uniqueness & antiquity.

4 . Fine Art

Probably not so uncommon, if you have an eye for Art, hodl onto it for generations and generations, well its never worth its value or is it?

Buying & selling famous paintings has been the domain of the ultra-wealthy in past, but today there are ways that the average Joe can get in the game. You can checkout Companies like Masterworks which pool people’s money and purchase blue-chip artwork. You can make up to 10% or more on your investment per year through it.

5. Music Royalties

Go to sites like SongVest.com and TheRoyaltyExchange.com and purchase a share of the song at auction. You will continue to receive royalties for up to 95 years after the Artist’s death!

Do you remember the Theme Song from the Monkees? Hey, hey, we’re the Monkees. That song still produces on average $10,000 a year. Read more about some of the weird unusual Investments here.

7 Luxuries of the wealth

Today lets discuss the Top 7 Luxuries owned by the richest of richest 1% in this world.

1. Super Cars

Elon Musk and his $1 Million worth Lotus Esprit submarine car, James bond style super car. Zuckerberg Pagani, Bill Gates Porsche 959 are some of the super cars owned by Billionaires. Not to mention they own multiples of them.

2. Artworks

Now some can call it Investment, others can call it a passion, a hobby or just a leisure, the eye for paintings or rare artifacts is a thing Billionaires love to have. But this Mexican Telecom Magnate took it to another level, Carlos Slim, owning museum of Artworks worth $800 Million which hosts around 66,000 collections from around 30 centuries.

3. Mansion

Here the list can grow huge, but we would like to mention the expensive of the most. Antilia, Mumbai, owned by Business Tycoon, India’s richest man Mukesh Ambani, worth more than a Billion this 27 Story Property have six underground parking and requires 600 staffs to maintain it! Want to read more checkout the site here.

Antilia, Mumbai, India

4. Island

Many Billionaires own Private Island for holiday retreat, to destress or rejuvenate themselves. To mention a few; Larry Ellison, Chairman, CTO, Co-founder of Oracle Software Giant, owns Hawaiian island of Lanai for around $300 Million. Richard Branson, founder of Virgin Group own Nector Island, British Virgin Islands! To check more click here.

5. Yacht

Just like Super Car, Super Yachts is treasured by many Billionaires. It is rightly said that being amidst the vast ocean, soothes & relaxes your mind, and this so called ‘Blue Mind Phenomena’ is the reason why many Billionaires & Millionaires park some of their cash in this Luxury!

Owned by Rober Kuok, History Supreme is one of the most expensive Yacht, priced at around $4.8 Billion, this super yacht have 68kg of solid Gold Aquarium and rare 18.5 carat liquor diamond bottle. Read here for more expensive yachts.

6. Private Jets

Billionaires can afford a lavish lifestyle and luxuries beyond our imagination. Airbus A380 owned by Prince Al-Waleed bin Talal for around $500 million is probably the most expensive Jet owned by an Individual. And here is your list to further explore including Donald Trump who owns a Boeing 757.

Boeing Business Jet 2 , owned by Ambani

7. Sports Team

Not Just Sports Car, Billionaires also like to own a Team! Steve Ballmer Microsoft’s co-founder spent around $2 billion acquiring NBA team Los Angeles Clippers.

We hope our beloved Millionaire Gary Vaynerchuck gets to get Jets soon 😉

Thank you for Reading, Let us know in comments below what is your to buy thing if you get a Billion dollar! Follow us for more, and Get Money Smart.

investing for Gen-Z

Born between 1997 to 2012, oldest Gen Z today would be 24 years old, read carefully, what we are going to tell you may decide your financial future in years to come.

If you have just started to earn or going to be soon, and you might have some plans for life, well, you may know by now, life doesn’t go as planned, always. Covid 19 and the stock market crash of 2020 is the most recent and vivid memory with many of us.

So, How should we take care of our Finances? What should we do to avoid black swan events like Covid from affecting our finances in future? How can we make sure that we are self sufficient!

Well the short answer is INVEST, Invest now!

Note- how early you invest matters more than the amount you Invest, because Compounding works best later down the time.

Lets discuss how to Invest when you are in your 20s:

  1. You must first save some portion of your money, in-fact one thing that we all get to learn from Covid is we should have an emergency fund (3 to 6 months of our expenses saved) before investing, so that we can rely on it incase of any unfortunate event. Read more about Emergency Fund here.
  2. Divide your Income into 3 Brackets, Save, Invest and Spend. A rule of thumb to start with is Save 20 bucks, Invest 30 bucks and Spend 50 bucks of your monthly income (more better approach would be 50, 20, 30; but consistency matter more than the amount you Invest)
  3. Spend low, live below your means, or expand your means. Yes I get that you may be fresh out of college and in your prime youth, thinking to party like crazy. While no body is saying, don’t party at all, but limit it as much as you can, the earlier you get into saving and investing rather than spending the better your quality of life will be. so shush the Party Animal within or just tone it down a bit. I know its hard to digest, But think do you want to live like king as you grow or you want to cut on your expenses and go take some huge loan to maintain all that family expenses that are inevitable at an older age. Somewhere down the line, I assume you would like to have your own house, a car and what not, so better you start investing now & be frugal, for more peace later in life.
  4. Do Invest in Stocks, own them as your own Business! Don’t stress too much on getting it right, everybody makes mistake and so will you.

Do you need to be conservative or do you need to go wild, all in?

I would suggest a balance approach, now that you have 30% of your Monthly Income to Invest, I would suggest you to divide it further into different assets like Crypto, Gold and Stocks (now if the money is very less to even divide you can alternate the asset class every month).

  1. 10% (of Investing Income) -> Cryptocurrency, where in further you should divide in Bitcoin & Etherum or at least a few coins to be safe and not miss the opportunity at the same time. What I would do would be to have 50% of my Money (of this 10%) in Bitcoin, 40% in Ethereum and 10% in Others (like Zcash, Dash, etc). You may like to read more about Cryptocurrency here.
  2. 5% (of Income) -> In Sovereign Gold Bond or some form of Gold at least, if the amount is too small you may consider something like ‘ICICIGOLD’ ETF which is currently priced at 44 rupees a share.
  3. Left with 85% of your Investing Income, you can go into Stocks directly. (In case that 85% of your income is exceptional, you are richie rich, I am glad you came here, you can further divide the amount into real estate and stocks!)
    • 10 – 50% in Broad Market ETF that tracks the index like ICICINIFTY, HDFC Sensex Plan for India or VTI, VOO for US Markets. You can make your portfolio 50% of this in case you not at all care about markets and don’t have time even look at your portfolio once a month. As a matter of fact, the legendary Investor Warren Buffet himself suggest a low cost ETF for all Passive Investor. Read more about Index fund here.
    • 25% in Momentum stocks, these are basically risky Mid & Small cap stocks, and since you have time in your hand you can take some risk. You can use smallcase for this. Click here to know more.
    • 10% on long term trend/idea you like for example Electric Vehicles, or The Great Indian Middle class, whatever you believe will be huge with time.
    • 0 – 40% in Direct Stock picks, now seriously I want you to take some risk, look around buy stocks of brands you own, you consume like that ITC cookies you eat, or Hindustan Uniliver Soap you use or Bajaj Bike you Vroom vroom… (Disclaimer – we are not suggesting / advising any pick). Now this can be most volatile part of whole portfolio, but it can be most rewarding if the research is done right, also with time you get better in this. Always always avoid buying on someone’s advice do your own due diligence. If you are someone who believes more in the promise of blockchain & cryptocurrency than you may like to flip the percentages 10% here and 40% there 😉

To Recap, put numbers in to perspective, lets say you have 30,000 as the salary than 30% would be 9000, Put 900 of it in Crypto (450 BTC, 360 ETH, 90 other Coins), 450 in Gold, 7650 in Stocks!

Remember – If you can’t achieve the percentages listed above, let it be, a bit up or down here and there won’t matter.

The Idea is to Diversify, Invest Early and Be consistent. Time is your best friend.

CAGR

To Read about the Common Mistakes that every Investor make, and to avoid them, click here.

Looking for some Earning Opportunity, click here.

Some TO DOs’ of Investing (recommended reading)

Thank You for Reading, We wish you loads of Happiness, Success & Wealth in Life. ~Team RiteFinance.

is 2021 the year of the bull?

My Outlook for 2021

Stock Market – While we are in good Bull rally so far in terms of Market in US, India and most of the parts of the world, we may see some rotation or correction going forward. By Rotation I mean we may see a flip or the Investments flowing more into the sectors of the market like Metals, Auto, Banks that was ignored in 2020 away from the stars IT, Pharma. Also there is nevertheless a chance of double digit correction in 2021, and this is where we need to be cautious and hold for long, not panic sell like most of us did in 2020. (If you are new to stock market you can open an account with Zerodha here)

Bitcoin/Cryptocurrency – Cryptocurrency specifically Bitcoin may see a slight correction going into 2021, but nevertheless the concept of Cryptocurrency is promising and it looks like it is here to stay for long at least unless an alternative is found. So I would like to be Vigilant here and Invest in dips. Remember always do your own due diligence before investing. To know more about Crypto click here.

Gold/Precious metal – I think Gold still holds value, and can surpass its 2020 high by 2021 end. Given the volatility in Market, and monetary policies of Govt., Bitcoin & Gold both can shine together for most part of this decade. Also this looks like the asset where Smart money will keep on flowing for most part of 2021. (Sovereign Gold Bonds is one good option if you are looking to invest in Gold in India, and best place to buy SGB is in open market using demat account like zerodha as the prices there are usually lower than current market price).

Real Estate – Now this is something I am totally unsure of, while Commercial real estate looks to be in decline, residentials and real estate in general may see some positive growth in 2021. I am expecting more growth in tier 2 & 3 cities compared to tier 1 in India.

NoteWhile above is my Outlook for 2021, By No Means I am here to encourage or influence you to make your Investment. Always do your own due diligence before Investing.

Read More here –

Thank you for reading. I wish you loads of Happiness, Health & Wealth in 2021. Happy New Year!

2020 Rewind : the good, the bad and the ugly!

Hello Riters, hope you are well, hope you are doing great, & hope we together reach new financial height this year. Thank you for all the support fueling me to write yet another time.

Today, lets discuss what are somethings that 2020 taught us. So lets dive in.

The Good

You might be wondering seriously was there anything Good?, lets not disappoint ourselves yet and follow along.

  • Legendry Investor Warren Buffett once said ‘Be Greedy when Market is Fearful and Be Fearful when Market is Greedy’. Now what do I mean by that is, 2020 gave us all the existing long term stock market investors a chance to buy great companies share at a discounted price, and it gave a golden opportunity for new Investors to put a lump sum, off-course after doing all necessary due diligence for the firm. Also not to forget the new highs that Stock Market reached in 2020 end.
  • Time to slow down and reflect. Yes, 2020 gave us plenty of time to slow down and reflect back on the necessities in our life. When we (Indians) were locked in for couple of months that was an opportunity for us all to slow down and re assess our priorities. Sometimes in this mad rush for fame, money we forget what we truly want, and I suppose for many of us 2020 gave us that golden opportunity to rethink our lives.
  • A respect for healthcare workers. Especially in a developing country like India we often times neglect the importance of health care. 2020 taught us the importance of healthcare, and I am sure it also helped increased Govt. budget allocation towards health care for near future.
  • Time to rejoice with family. Sure lets admit it, it was not all roses when we had to spend time with everyone under the roof, but nevertheless for many of us it led to better understanding and importance of family.
  • Need for luxuries. You might be wondering what? we are talking of luxury, hold on one sec, hear me out. Now not everyone would agree on this point, But 2020 taught some of us the need to have our own little private beach house or a hill side mansion where we can retreat if another such calamity re-appears. Now, this does not mean we should not help fellow beings, in fact one thing that 2020 taught us was what is enough and what should we do for the society as a whole.
  • Another asset class saw some glitter. I am not talking about Gold well that too was pretty volatile, and gave opportunity to many of us to cash in/invest; nevertheless there is one asset class that out performed everything else in 2020, Bitcoin – Cryptocurrency! 2020 saw Bitcoin breaking its records time and again. It was also the year that taught us the need for digital currency and decentralization.
  • Refinance, not to forget with Interest rates at all time low, 2020 gave us an opportunity to refinance our loans, and mortgages.

The Bad

The easy part, I am sure the list can go on & on for many of us here. But let me say it I want to rewind 2020 with more positivity & hence I have already given the positive angle, covering most of the Bad in the Good by flipping the lens, the perspective or whatever you call it. And if you are still with me than hang on, we are going to discuss the most important lesson that 2020 taught us, below.

  • ‘Hey Rahul, Give me some cash man, I am broke, please help’, ‘Sahaab kuch kaam nhi hai, khane ko kuch nhi hora, thodi madad kariye na plz’ (Sir, we don’t have any work, nothing to eat, please help). These were some words I am sure many of us would have heard who would have tried to reach out to their cook, maid or even friends during lockdown. While we were busy living paycheck to paycheck, Pandemic happened! And we were never prepared, never learned the importance of Emergency fund and savings. If there is just one thing I want you to learn from this Pandemic it is the importance of Emergency Cash. Read more about Emergency fund here.
  • ‘I lost my Job, I have consumed all the Stimulus check (applies to United States specifically), Can I borrow some money dad?‘. In Early 2020, when Pandemic knocked our doors, stores were shut down and it was a sight all around the global, with consumer spending at all time low and unemployment all time high, we were left with barely food on our plate. Now most of this was out of our hands, but still there was something we could have done about it, ‘Invest’, Invest, Invest! Yes, you heard correct, Invest and let the asset grows, Invest in yourself and let the most important asset your brain grows, so that when you are out of one opportunity you have something to fall back to. I know it is easier said than done, but things like side hustle and Investment can help us better cope with difficult times. Especially when the future Jobs are changing it becomes even more important to re skill ourselves by teaching ourselves a new skill in demand like video editing, data science etc.

The Ugly

I wish their was a skip button and I could just skip this part of 2020.

  • Death, Desperation and Misery. Yes, lets admit it, It send shivers in our spine when I saw coffins lined up in places like Italy, and people were not even allowed to have the rituals performed for their loved ones. While the worst is over, is behind us, nevertheless we should not forget the importance of life. Money is good but its not the end in itself, we must realize its worth. We must understand the importance of Happiness and why it matters more than the riches & luxuries in our lives. Nor should we forget the importance of donation, charity, philanthropy and the need to uplift the other half, and at times the better half of our society.

Key Takeaways

If you have made it this far or if you have skipped through most of the article, so here I urge you to stop for a minute.

  1. Importance of Emergency Fund. 2020 taught us the importance of having some cash set aside, specifically 3 to 6 months worth of your expenses in a liquid, high yield savings account.
  2. Happiness > Money, while Money is important it is not the end in itself, realizing its place in society and realizing the need to help the poor & needy is a great lesson to take away from 2020 and well on to rest of our lives.
  3. Importance of Personal Finance. Often neglected & hardly taught in schools, Money management, personal financing is important skill to master. Paying heed to your finances, tracking expenses and saving some extra cash will be the good place to start.

With this and without further making this blogpost any long, I wish you loads of Happiness, Health & Wealth in 2021. Happy New Year!

CAN 2021 Stock market crash?

Will Stock Market rally continue well beyond 2020, or Is Market likely to Crash in 2021? Lets discuss all this and more, lets dive in.

Stock Market can Crash if

  1. Unemployment – Number further rises
  2. Lockdown – More restrictions are put in place in people movement during Covid
  3. Disconnected Economy – If the Economy continue to remain disconnected from Stock Market due to several factors like current Monetary policy.
  4. Lower Profits – If Company realizes the profit are not back up even after opening up the stores.
  5. Geo Politics – Geo Political factors like Indo-China or US-China tensions further aggravates it may push up the VIX (volatility Index) and bring down the stock market.

Stock Market can Rise if

  1. Stimulus continues – This one applies especially to US Stock Market, if Congress decides and agrees on stimulus paycheck you will probably see the new all time high continues…
  2. Vaccine knocks your door – This one goes for Global toss, Vaccine launch will lead Economic recovery and all uncertainties will fade away leading the Market to continue to rise.
  3. Bad Priced In – Stock Market looks ahead of its time, and one theory is the bad is already priced in so Stock Market will continue to rise in the near foreseeable future.
  4. Govt. Intervenes – If Govt. continues to intervene and keeps the interest low, leading to Inflation and the stock Market rise.
  5. Recovery Stocks – If some sectors continue to perform well like the IT and Health care, it may overall skew the Market to achieve the all time high.

Data suggests Stock Market Crash or corrects double digit every 6.9 years.

So, What to do if it Crashes?

  • Don’t Panic Sell
  • Keep yourself diversified
  • Keep some emergency cash

Read more to know more-

Thanks for reading, Happy Weekend, Happy Investing!

Oops! I picked itC.

Stock picking is tough, and therefore you must always do your due diligence before proceeding. Today, let me share you my developing on going strategy, which I recently followed to select a stock.

An Amateur approach to Stock picking:

  1. I hear about Stock in news, among consumer, from friend or are a consumer of the product yourself, have seen that soap Ad and wonder whats the brand behind this successful Ad.
  2. I google search to see the stock price and trend (least helpful), but tells you if it is fine or it is very fluctuating something that happens when stock has very low volumes.
  3. I log on to simplywall.st (you can check the company site if you can or some other site where you can read up about below information) –
    • The Area graph of company (for look and feel and comparison among alternative stocks), check Fig 1 below.
    • Current Price of the Stock is it fair, over or under value (not doing any calculation as an amateur), check Fig 2 below.
    • Finance Analysis, the part I read carefully and specifically focus on Debt (in current Covid scenario it becomes even more important), check Fig 3 below.
  4. Head on to Moneycontrol and look for (check Fig 4 below)-
    • P/E (Price to Earning) ratio of the company compared to the Industry (it should not be way below or above). A low ratio indicates company is undervalued, high indicates its overvalued.
    • P/B (Price to Book) ratio, how is the stock trading with respect to its book value. I prefer usually a little higher than 1, but it may differ based on sector.
  5. Look at the Sector, for example – if the Stock is ITC, FMCG or Consumer Staples being the sector how will that be in near future.
  6. Current Geo-political or Economic scenario (remember only in long run stock market correlates with a nation economy)

But Salrite I do have some extra time, Are we done? – well, perhaps you can:

  1. Look for Consumer Sentiments on the Product, dig up the Social media see if you can find something about its product/services
  2. Management Information how is the company management.
  3. You may also look at other ratios like EBIT, or EBITDA; I usually don’t to avoid paralysis by analysis.
  4. Check if the Stock pays Dividends or not?
Fig 1 – ITC Stock dynamics
Fig 2 – Is the Stock trading at a fair price?
Fig 3 – ITC Balance Sheet
Fig 4 – ITC Valuation (Source – MoneyControl)

Remember – No Matter how much you analyze there will always be some risk involved, and there is no guarantee the stock you pick will give you good return no matter what others say! So If you are new to this game and are passively into it, please go for a low cost Index fund, here is my article explaining why?

Thank You for reading, Happy Investing!

Cheers for index!

Hello Riters, its been a long time out there, getting ready for Winter in Northern Hemisphere?

Today lets discuss why Invest in Index ETF and why avoid Mutual fund, lets dive in.

  1. In long Market always rise, thats not me saying, the likes of legendary investor Warren Buffet himself believe so. So, lets say if market always rise what is the best way to be on winning side?, of course buy into overall market low cost index fund like VTI
  2. On average 90% of actively managed mutual funds have underperformed benchmark indexes over a preceding 15 years period.
  3. If your Mutual fund have 2% of fees (expense ratio, portfolio fees, handling charges and other hidden fees), than that can eat 61% of your portfolio growth in long run. Shocked? No?, let me explain, suppose you have invested $10,000 and kept it for 50 years in Stock market just assuming a return of 7% (ideally returns are above 9%), your portfolio will grow to a lump sum of $294,600 by end of 50 years, now if it was a Mutual Fund with charges of 2%, then you only avail benefit of 5% CAGR, leaving your portfolio to grow to $114,700 (61% lesser or 39% of $294,600 market returns) read more here.
  4. Still not convinced? Lets say recession hits you in that case your portfolio will likely decrease in value but at the same time you will be charged the fees (the so called Active fund managers will still win this game).
  5. Expense ratio of Index fund is very low and there is no hidden charges, for example – VTI has an expense ratio of around 0.03% and If you are in India checkout ICICINIFTY with expense ratio of just 0.05% (let me know if you find something better in comments below, the likes of VTI is missing in Indian market)

Don’t take my words for it, always do your due diligence before investing. If you want to read more grab your copy of ‘Common Sense Investing’ the book by the founder of Vanguard Group.

Bonus Content – what to do in current stock market scenario? (for retail investors)

  • Stay Invested, don’t sell value stocks so as to be able to avail the benefit of further highs
  • Sell the stocks that lacks value & strong fundamentals and are up just in the Bull due to investor sentiment.
  • Don’t invest a lump sum new investment amount, as the market is still prone to volatility due to Covid.
  • Remember you have to buy in dips, sell in highs.

To read more on mistakes to avoid in Stock market check this. And if you are worried if Stock Market can crash in 2021 read this, click here.

Don’t let them take your hard earned money, get control of your money now! Be Financially aware, be financial literate.

Have a great weekend, happy investing! Happy Holidays… Stay Invested, stay safe, stay positive.