The COVID-19 Challenge: How to Invest in your Financial Future Mid-Pandemic

COVID-19 is here for the foreseeable future. While most of us have become accustomed to navigating the restrictions put in place to protect our health and safety, stress levels remain elevated. Canadians are riding an emotional roller coaster as they navigate job loss and reduced income, not to mention market volatility,

While there are no pandemic-specific case studies we can turn to for financial guidance at this time, there are certainly approaches one can take to promote the best possible outcome in the midst of uncertainty. Here are three to consider:

1. Be flexible, even in the face of fear.

The word of the year is pivot. Just as businesses must adapt to the new normal, so too must investors.

Adapting requires a willingness to let go of the familiar, and letting go can elicit fear. What if you make a mistake? It’s a fair question. Mistakes happen. Just ask billionaire Warren Buffett. He made plenty, yet that didn’t prevent him from becoming one of the most successful investors of all time.

Consider the reasons you’ve bought and sold investments in the past. Do those reasons still apply in today’s financial environment? If not, adapt. Adjust your focus to new and potentially better opportunities. If you make mistakes, acknowledge them, learn from then, and then move on. Even if you’ve taken a financial hit, look to the future rather than dwelling on the past.

2. Avoid the vulnerable to minimize your vulnerability.

COVID-19 put an instant halt to industry conferences and live events, and even with businesses reopening, face-to-face interactions are sure to remain minimal for months to come. Only the resilient will survive.

As businesses scrambled to pivot, their digital vulnerabilities were exposed. Those that had invested in their online presence held up well, many even thriving, while those with limited or no digital presence were forced to scale back considerably or shut down completely.

With no end to the pandemic in sight, the gap between the digital haves and have nots continues to widen, and at an accelerating pace. For this reason, investing in companies that have little debt, lots of cash, and robust digital infrastructures is a sound decision across all industries, travel and hospitality included.

3. Keep your emotions in check.

Today’s pandemic-induced emotional ­­­rollercoaster is taking certain markets, stocks and sectors along for the ride. Depending on the pervasive mood of the day, investments go from being extremely overbought to extremely oversold.

It’s important to keep in mind that fear and greed – not economic fundamentals – are causing these swings. Such is the nature of herd behaviour. Irrational optimism drives prices up. Irrational pessimism drives markets down.

While you may be tempted to follow the herd, resist the urge. Instead, take a note out of Warren Buffet’s book and be “fearful when others are greedy and greedy when others are fearful.”

We will get through this.

Global events always impact stocks for the short-term. History shows, however, that stocks do recover over time. So be patient. Continue to plan and act thoughtfully. And reach out to an FEA at Foundation Wealth Partners if you need any support weathering this storm. We’re all in this together.