By Chris Jones, Proposition Director
In a capitalist free-market society, I have a choice to use the fruits of my labour to buy things from a company or buy parts of a company. But, because I am human I rarely think about it and invariably spend more on buying things because I get immediate gratification.
The practical impacts of COVID 19 have brought this subconscious decision more to the front of our minds.
Firstly, the connection between what we do as consumers, and how that impacts us as investors has some clearer examples; we aren’t flying and therefore airline stock is going down, but on the other hand, we are using Amazon and Zoom and they are going up. Our relationship with supermarkets is confused as is the share price.
Secondly, my preference for immediate gratification is being curbed by the lockdown and social distancing. I look at my online banking and the previously dominant entries from coffee shops, bars, restaurants, and travel have vanished. If you are fortunate not to have had a cut in your income then you will see an unusual monthly surplus.
Finally, ‘rainy days’ do happen; our certainty about the world has taken a hit; we didn’t see this coming; we can’t see how this will play out; and can’t foresee which companies will be needed and thus successful when we need to spend our investments.
DIY investing no longer seems so easy and the value of expert financial planners and asset managers is easier to see.
People who are experiencing this may therefore benefit from not only staying invested but also diverting the money they are not spending into increased or even new regular savings. Modern ISAs, GIAs and pensions are no longer rigid commitments, so you can always stop this when the pubs open again. The choice is always there but current circumstances are weighted towards bargain investments rather than bargain stores or happy hour.
Have a look at our Content Hub, where we have written a guide on the value of remaining invested that you can use with your clients.