Holding Your Nerve with Your Investments

There is no disputing the impact of the Covid-19 pandemic. Despite previous coronavirus outbreaks in Asia, such as SARS in 2002, on this occasion it’s different. Time now seems to be divided into ‘before and after’: the old normal and the new socially distanced reality we are now coming to terms with. These two eras are clearly visible in the global stock markets, most of which fell sharply in March as the virus spread globally, closely followed by lockdowns and economic contraction. 

The investment scene has certainly altered, at least for now. There has been increased volatility in the values of investments while businesses have reacted to the new environment in many ways, the most obvious being to reduce dividend payments. 

However, it is worth trying to take a longer-term view. Think back – if you can – to previous crises, such as the banking crash of 2007/08, the 9/11 terrorist attacks, and even the stock market crash of 1987. At the time, each of those events felt momentous and a break in history. Now, with the benefit of hindsight, these may even appear as little more than dips on a long-term chart. The investor who stayed the course did suffer in the short term but benefited in the long term. The investor who panicked and sold up may have chosen the worst point to do so, and then faced the difficult decision of when to reinvest.

 The value of your investments, and the income from them, can go down as well as up and you may not get back the full amount you invested. 

Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.