What does the Covid-19 pandemic mean for your investment? Should you be investing during a Pandemic?
The Covid-19 virus caused a sharp drop in financial markets across the world. Triggering the FTSE 100 to sink to its lowest level since 2011, reaching 4945 on Monday 23rd March. Since this dramatic low, the market has been experiencing a certain amount of positive gains, following significant financial promises and investments by the government. This level of volatility is set to continue for a number of months as countries around the world battle to get on top of the virus.
Following the ‘Lockdown’ implemented on Tuesday 24th March at 8.30pm by the UK Prime Minister and the governmental aid that has been rolled out prior and since; some gains to the FTSE 100 can be seen. It is too early to say yet if these gains, as much as 10% in some markets, will be long-term and a true indicator that a recovery may only be a few weeks away. However, such uncertain times can represent a good opportunity to invest due to a large number of funds and companies’ share prices being heavily discounted. This means that large gains could be made in a comparatively short amount of time provided money is invested well in this time. Returns are by no means guaranteed and people could still make losses but the opportunity is there. Indeed it is a better time to invest sensibly now for the long-term than it was six months ago when global markets were much higher.
It is a common misconception that periods such as this are times to avoid investing but provided you are looking to invest for the long-term, which we would define as five years or longer, and are not looking to make a quick profit, investing during a pandemic could be an ideal time to invest. The Harvest Partnership Ltd stands ready to provide advice and guidance to new investors and old at this current time of uncertainty.
Throughout this unsettling time, The Harvest Partnership Ltd have been and will continue to be on hand to discuss existing clients’ portfolios, as well as speaking to new clients. And rightly so, there have been some imperative questions asked in regards to investing during a pandemic.
For those who already utilise the services of The Harvest Partnership Ltd, if you have concerns regarding your portfolio, please do not hesitate to get in touch with us, your Independent Financial Adviser. We are available to discuss your questions and concerns and will aim to put your mind at ease.
For those who are considering getting in touch, please continue to do so. We are continuing to serve the community with the essential Financial Advice service as the same quality and standards we have always been committed to delivering. We have had to adapt our processes to suit the current laws that have been introduced to battle the pandemic but we are here to help.
The Harvest Partnership Ltd can be contacted via our Contact Us page.
General questions that have been asked in regards to investing during a pandemic.
Should I crystallise my investments now to prevent further losses?
The temptation may be great, but selling your investments now would only crystallise the losses that may have occurred over the last month. The market drops, though large with many businesses potentially at risk, should be temporary whilst looked at over the long-term. Unless you need capital now for an emergency we would recommend that you keep your money invested. If it has been invested under the advice of The Harvest Partnership Ltd you will be in invested in funds that have a long track record of success and so they should be well placed to recover when markets do so. Be it in the next month, year or beyond. Additionally, we will have invested you only if you have a long enough investment horizon for your portfolio to ride out such a storm. We consider such events occurring when we make our recommendation.
While you remain invested the drop in value represents a change in value on the page you read it off, if you take your money out of the investment at this time you will make the loss concrete and you will have lost money on the investment.
Should I rethink my large investment?
If you are considering making a new investment, though it may seem more fraught at the moment, market prices are lower than at any time since 2011. The argument goes that it is the best time to invest for a decade as markets have proven time and again that they always climb to their previous highs. This could take a while but they do. So, there is plenty of value in the markets and new investors could be picking up bargains by investing during a pandemic. These sentiments hold true for those who have already invested too. With nearly every investment fund falling in value at this time any switching of funds will be purchasing new units in new funds at similar discounts.
Due to the nature of the crisis, a complete shutting down of the demand side of the economy, many very well run businesses and funds are losing value and trade which would not be the case in more ordinary times. We can therefore largely expect the best run companies and funds from before the pandemic to bounce back strongest when the recovery happens. We can therefore still base judgements on previous performance as well as forward expectations.
To conclude, provided your investment planning and savings horizon is long enough you do not need to re-think an investment. If any changes need to be done, The Harvest Partnership Ltd will be able to provide advice. Although in the majority of cases it will be a case of holding tight and weathering the storm if you have already invested for the long-term.
I am due to take my pension. Should I take it now or wait until markets improve?
This entirely depends on your current circumstances so we would encourage you to contact us to discuss pension advice. As general expectations are that there will be a large bounce back when life returns to normal for well-run companies that have weathered the storm; long-term investment decisions, such as about retirement can and should still be considered. However, the current market conditions make the value of good advice of a greater premium and so we would recommend you seek the help of a Financial Adviser you can trust.
Despite the Furlough payments, I am going to experience a significant loss of income. Can I take money from my investments.
The very short answer is yes you can! However, it is vital that it is done properly via taking income from the interest and dividends generated by your portfolio. Taking income from selling units or shares at this time should ideally not happen as doing so will crystallise losses. It very much depends on your current situation though and so it is strongly advised that you speak to a Financial Adviser to facilitate this. This is a particular specialty of ours at The Harvest Partnership Ltd so we would encourage you to get in touch with us for help in this matter!
Throughout this unsettling time, we would encourage any client or future client to get in touch if you feel you would like advice, guidance or to talk over something that is troubling you. As we have stated in our Covid-19 Business Update, our first and foremost thought is the health and welfare of our staff and clients. We are, and will continue to be here for you.
You can fine our contact details on the Contact Us page.