Since COVID-19 forced the world into lockdown in March 2020, it’s been an unsettling time for investors. Overall, in 2020, the FTSE 100 fell 14% and the asset price of bonds and property took a sharp tumble too. Not surprisingly, some of the firms to be hit the most have been travel companies such as easyJet, whose value slumped so low it actually crashed out of the FTSE 100.
Things have improved since then and the markets are currently sitting at their highest point since the pandemic began. But there is no doubt that volatility is here to stay for a while – and any further restrictions or delays to the vaccine program could send the numbers spiralling downwards once more.
So, should you be worried? Let’s take a look at some of the facts.
Dividends
After COVID-19 hit the UK, many companies stopped or delayed paying out dividends. According to the financial data company Link Group, 45% of listed companies had taken this step by April 2020 – resulting in pay-outs of £28.2bn being shelved. Only those investing in healthcare or food seemed to be on safe ground. The situation is likely to improve as restrictions ease, but there is no telling how long it will take for everything to get back to normal.
Diversification
One of the best ways to keep your money safe is to build a portfolio that spreads your investments across different areas and geographically too – such as equities (shares in companies), government and corporate bonds (loans to these organisations), and property – and within these asset classes, to choose different types of businesses or organisations. Each will have its own level of return and risk, so it’s crucial that whatever you’re investing in matches your own attitude to risk.
Ethical investing
One new development is that the pandemic has made people far more interested in investments with Environmental, Social, and Governance (ESG) principles at heart. One in five (22%) of UK adults are now exploring ethical funds – and that rises to 35% in younger investors (those under 35). Investors are now also much more interested in where their money is going. Currently, only 11% of people are really confident that they know what they are investing in, yet 52% believe that carefully selecting where you invest is one of the best ways to protect the planet.
Review your portfolios
If everything that is happening in the world is making you feel nervous, there is nothing wrong with giving your investments a bit of a health check. Talk to your Financial Planner, review your goals and what you are trying to achieve with your investments. Look at your timescales and make sure you are making the most of your tax-free allowances.
Don’t panic!
The very nature of stocks and shares means that they can always go down as well as up. What is happening now isn’t that unusual if you look at previous pandemics. The SARS outbreak in February 2003, avian flu in 2006, the new strain of swine flu in 2009, the Ebola outbreaks in 2014 and 2018, and the Zika virus in 2016 all caused significant stock market turbulence. But in the long run, the markets eventually bounced back.
Most of the time, the best thing to do is to do nothing. That is why when you invest with us at UNIQ Family Wealth, we always take a long-term view. We help you build a diversified portfolio that can cope with the ups and downs of the markets and weather any storm. Then, if you are hit by a global crisis like the one we are in at the moment, all you need to do is be patient and wait for everything to get back on an even keel – and in our experience, it always does.
If your money is invested using UNIQ’s investment strategy, in partnership with J M Finn, you know you are in good hands. However, if you would like to review your investment portfolio or talk to us about where you should put your money, get in touch.
