Investing in a post Covid-19 world: Saturn Advice

Covid-19 has impacted on investing and not necessarily in the ways we might have expected.

Lance Dawber-Ashley of Saturn Advice says, in March 2020 when it became clear Covid-19 was likely to affect hundreds of millions of people worldwide, share markets did what they usually do in times of uncertainty and fell sharply. “In the United States, markets fell more than 30 percent by March 23. The drop in our local share market was similar.” However, no one could have predicted what was to follow; a strong rebound fueled by supportive government policies.

Fast forward to June 2021 and he says many international share markets are at or near record highs, and interest rates at or near record lows. “A surprise to many is the strong rise in house prices over the last 15 months to record levels. In March 2020, some commentators predicted a significant fall in house prices due to the ‘enforced recession’. Low interest rates, expat Kiwis returning home and reduced housing supply means the opposite is the case.” So where to from here? he asks. “Investors who prefer the safety of term deposits are hurting from low interest rates. Today, a six-month bank term deposit is likely to pay interest at around 0.8 percent per annum. Just three years ago, the rates would have been close to four times higher. “The bad news is this situation is unlikely to materially change any time soon.”

So, what are investors supposed to do? “Firstly, we don’t suggest trying to time markets. Those investors who cashed up in February/March 2020 fearing the worst from Covid-19 likely paid a heavy price. Secondly, create an investment strategy consistent with your financial goals and stick to it. Thirdly, ensure your investments are diversified across assets and asset classes. Finally, the reality for conservative investors is returns from fixed interest investments are likely to be modest for the foreseeable future. That creates a dilemma to either stick with a conservative approach or to take additional risk in expectation of better returns.”

“Vast amounts of often contradictory investment information is available to the public which can be confusing and challenging to make sense of. “This is where a financial adviser can help. Do yourself and your investments a favour and get in touch with me for a no obligation chat, even if it is just to confirm you are on the right track!”

Lance is a financial adviser with Saturn Advice with offices in Christchurch and Auckland. He can be contacted by calling 0800 757 858 or by emailing lance@saturnadvice.co.nz.

The information provided is of a general nature and should not be treated as personalised financial advice.