Should COVID-19 inform your future investing?

After a year of uncertainty, the world is starting to shift back to calmer water. Or perhaps we’ve just gotten used to the crashing waves. Either way, if you’ve adjusted to the new normal and have some savings to invest, it may be difficult to know which moves to make to maximize your return.

Here are a few ways you can learn from the market during COVID-19 to help guide your next steps when investing in the future:

Invest in the long-term

In the spring of 2020, the market suffered losses due to the unpredictability ahead. While the results were nowhere near what happened in 2008, the event underscores the importance of long-term investing. Growing your money in uncertain times means making a plan and sticking with it.

Future investing post-pandemic

The shorter the time frame, the higher the risk—and the more likely you are to pull investments when the market starts to turn. Whether you’re investing on your own or working with an ACU financial advisor, a strategy that takes an extended view into account will yield stronger results.

Overall, this is a safer approach that allows you to beat emotional selloffs and help you reach your goals.

Be comfortable with your risk tolerance

Understanding what kind of investor you are is important in times like these.

If the market becomes unpredictable again, would you feel comfortable taking losses? Are you a couple of years away from retirement or do you have a few decades before you’ll start drawing from your portfolio?

Create a plan based on your profile and stick with it. Even if the market mostly regains its losses, there may still be dips ahead. A disciplined approach in times of uncertainty is a strong strategy that will pay off.

Related: Top 20 investing terms you need to know.

Build a diversified portfolio

The shift to digital communication and remote working isn’t going away anytime soon. So, creating a strategy that includes technology stock is something to consider. However, knowing which ones to choose takes a lot of research and a little luck.

Video conference investors, for example, had a handful of platforms to choose from pre-COVID, including Zoom, Microsoft (Teams) and Google (Hangouts). For those who chose Zoom, at its peak, they traded at over $550 per share—up from their $36 IPO in April 2019. However, it could have gone another way.

Future investing portfolio

That’s why investing in funds (a collection of stocks managed by a fund manager) or building a diversified portfolio will give you more stability by offsetting some market volatility to balance your return.

Look beyond the balance sheet

The way companies handled the pandemic can also give you some insights into how well they align with your future investing outlook.

Did they prioritize profits with large rounds of layoffs or people with COVID-19 support programs? How well did they adapt their business model to pivot during a challenging business climate? Did they continue to fulfill their pre-pandemic promises?

This not only applies to your investments, but also companies that you frequent or services you use. The pandemic has helped to expose corporate values, so if you’re an ethical investor and are interested in Responsible Investing (RI), this information can help you make more informed choices moving forward.

Save to invest long-term

Give your future investing a solid return

In the months ahead, there’s still a lot of uncertainty. Hopefully, the widespread rollout of vaccine candidates will continue to increase consumer confidence and deliver a more predictable financial outlook.

While you can’t build a pandemic-proof portfolio, you can create a diversified investment strategy built for the long term. This will help you weather the storm and come out the other side much closer to your goals.

If you’re looking for support with your wealth management, investing or financial health, schedule an appointment with an ACU financial advisor today.

About Matt Cohen

Matt is a Winnipeg-based marketer and investor who covers the Canadian financial services industry.

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