Lessons Learned from 2020 for Investing in a Changing World may perhaps better prepare us for what comes next. While markets have seen significant ups and downs in the past, including the financial crisis more than a decade ago, nothing could have prepared investors for the roller-coaster and uncertainty of 2020 as markets responded to the coronavirus pandemic and global economic lockdowns.
The unexpectedly quick recovery has taught us valuable lessons that we can apply as we make investment decisions and set our investment goals for 2021 and beyond and start making decisions about investing in a changing world.
While the economic lockdown was arguably the most economically disastrous event in living memory, the JSE All Share Index and major global indices have recovered to similar, and in some cases, higher levels than before the crash started in mid-February, even though the pandemic continues to wreak havoc on economies.
However, the world is changing, and not just because of the pandemic. That means that in order to try and achieve that guaranteed income any investor aspires to, some things need to change. Here are some pointers.
Lessons Learned from 2020 for Investing in a Changing World
Learn How to Ride Out the Storm
Despite the fact that experts agree that maintaining a level head is the cornerstone of investing, many investors act rashly when confronted with a crisis, believing that the current situation is unique from previous ones. Even an event that brings down all economies at the same time, as 2020 demonstrated, can be weathered just as well as any other.
Lessons Learned from 2020 for Investing in a Changing World
Diversify
A diverse investment portfolio is more important than ever if you want to make the most of investing in the changing world of 2021 and beyond. While safe investments, those that can offer consistently excellent returns can be found, you may now need to think further outside the box. Or find an investment advisor who can. While some balk at the idea of getting help you can find experts who charge low fees and still provide the guidance you need. Talk to one of our independent consultants today and get the best advice now.
Companies that pivoted and adapted during 2020 survived, and people who were most adaptable and flexible will weather the storm in terms of their jobs, businesses, mental strength, and with the right guidance, their ability to gain from their investment activities.
Lessons Learned from 2020 for Investing in a Changing World
Keep Some Cash on Hand
Many people do not save money, so if they lose their job or their business fails, they are forced to make rash decisions and sell investments at the worst possible time. Don’t be one of them. If you maintain the amount of available cash that most experts recommend – three months’ worth of salary in cash – you can give yourself a bridge over a few months. This rule will prevent you from making potentially make a huge financial mistake allowing your long-term investments to remain intact.
Lessons Learned from 2020 for Investing in a Changing World
Decide on Your New Priorities for Investment
The pandemic has compelled us to consider how we want to rebuild our economy. People are becoming increasingly aware of the critical importance of growing their retirement savings, leaving a legacy, and having a meaningful impact on surrounding communities as a result of the recent uncertainty.
A changing world, and changing personal priorities, means that, at the very least, now is a great time to review your current portfolio and investment strategies. It is critical to devise ways to bring them in line with investing in a changing world and your changing personal challenges, ambitions and needs.
Keep your mind open and read and learn about this new world in order to not only survive but thrive. Speak to one of our Consultants for the latest trends and forward thinking investment models.
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