Mark Hollingsworth

How to invest wisely during the Coronavirus meltdown

At time of writing, global stockmarkets have witnessed some of the largest daily fluctuations since the financial crisis; on the back of continued concerns with the virus and how long it will last and the impact on the global economy.

For new investors this can be extremely worrying times as you will not have been used to such short-term volatility. For seasoned investors who went through the financial crisis of 2008, the technology bubble of 2000 and even black Monday in 1987, the short term pain being witnessed is often seen as a confirmation that although stockmarkets can’t always go up, over the long term, they always have done so.   With this in mind, it is important to remain calm and not change your investment time horizon. If for example you are saving for your retirement ten years from now; then maintain that timescale and don’t panic sell on the back of a matter of weeks of market downturns. The reason for this is that the coronavirus is an unforeseen event as opposed to their being any change to market fundamentals. Parallels can be drawn with the SARS outbreak in 2003. Markets fell over 14% at that time, yet the year ended up 18% higher - a swing of over 30% from bottom to top.

Don’t become a day trader

Unless you are already a professional trader then don’t be tempted to become one overnight. When markets are swinging 5-10% on a daily basis at the height of volatility, stockmarket bargains undoubtedly surface. It is however very dangerous to predict short-term movements if this is your strategy to make money. Trying to time the market often ends up disastrously, instead – maintain your original strategy and don’t try and rely on making short term gains.

Review your portfolio

The best long-term portfolio is one that is diversified across asset classes such as stocks, bonds, cash and property as well as being spread geographically, not being solely reliant on one economy such as the UK or US. To do this, it is worth using the services of a financial adviser or wealth manager who will be able to properly assess the suitability of any existing investments that you hold in line with your chosen objectives. The adviser will also be able to make new suggestions as (s)he will have resources to do so as they often work alongside large institutional fund management companies. The key is to make sure you have sufficient diversification to not only make money over the long term but to also add some protection against short term fluctuations.

Finally, with any such news there always comes fraudulent, scam investments varying from suggesting investing into a company that has found a cure for the virus to attempts to simply asking for charitable donations. Such cybercrime is rife and should be avoided at all times. The World Health Organization (WHO) is among the most-impersonated authorities in ongoing scam campaigns. An example is when fraudsters pretend to offer important information about the virus in an attempt to get potential victims to click on malicious internet links. Typically, such links can install malware software which steals your personal information. The key is to remain safe with your health and your wealth.

Back to Top