Before I start this post, I just want everyone to know that all things I write in this post are just my opinions. None of this is financial advice, and I would never force anyone to do what I say. When I got into investing in stocks and shares, I took all the advice and information around me with a pinch of salt, and have always tried to make my own decisions, and understand why I do.
So with that said, I’m talking about money again. Today I wanted to share some thoughts on getting into investing in a time like this.
Impact on Our Lives
As we all know, we’ve been in a pandemic for over a year now. It’s had such a massive effect on all our daily lives. The main two things it has affected is finances and our ability to go places. In a lot of ways, it does feel like a year has been wasted. But of course with that I think there are a lot of opportunities to step back and take advantage of this time.
As well as being able to rethink the paths of our lives, or having little choice but to do that, we can rethink some other aspects of how we live our lives. For myself, I’ve been researching new ways to earn an income.
And so I was adamant to learn everything I could about long-term and sensible methods of investing.
Impact on Stocks and Shares
It’s pretty obvious looking back over the year how many companies worldwide have been impacted by the pandemic. Most companies have suffered and their share prices have gone down massively. With all the uncertainty of when ‘normality’ would return, or what’s going to happen next, most investors sold their holdings and liquidated their positions. So they basically got their money back.
Obviously not good for companies everywhere, it’s hit the markets of countries all over the world. For some companies there’s good reason since the lockdown has cut off necessary business and lost companies a lot of money.
With stock prices going down all of a sudden in March 2020, it has one of two knock on effects. The first is most big investors selling their shares for fear of losing more money. And the second is the opposite happening.
Good Time to Buy?
In hindsight, if you checked the share prices of most companies last year compared to now, you’d probably have seen a missed opportunity. March 2020 seems like the best time to have invested in the stock market.
For most companies this is true, in fact even for companies that are still suffering now such as most airlines. However, this doesn’t mean that any and every stock is a good option to buy.
Choosing Solid Companies
I think the past year has been one of the best chances in last 10 years to snap up more bargain stocks. But if there’s something to think about, it’s whether these companies are good to hold for more than just the duration on the pandemic.
This is where doing a little research into companies that you invest in will really help.
I don’t think you have to be some financial genius to start investing. What helps is using your knowledge of what you already know about.
For instance, last year I put a very small amount of money into McDonalds. For most of us, I think it’s the perfect investment. It’s not a complicated business, we know it’s a very popular fast food restaurant chain that is located all over the world. I’ve personally seen it in most countries I’ve visited.
They’re fairly good value, they’re very convenient and offer a pretty quick service in store (particularly pre-pandemic). In the past 2 years, I’ve seen them upgrade their stores to include a kiosk so more people can order food more quickly, as well as a mobile app to order as well. And right now in the UK, they’re doing home orders with UberEats, which arrives very quickly within 10 to 15 minutes. So all in all, they always attract customers back because of some of these factors.
So knowing that, you can apply this assessment with companies that you interact with everyday to understand whether they make a good investment or not.
Some Companies Have Thrived This Year
Even though most companies aren’t having a great time, we’ve still seen the odd anomalies that have absolutely thrived. Take the most obvious one, Amazon. In the middle of last year, Amazon’s share price jumped massively to an all time high. This was due to everyone shopping more online since no one could leave this house and shops were closed.
Another one is Zoom. Again, due to the circumstances, this meant it made sense to use a video calling service to contact loved ones, or to aid in the work place. So of course, it’s share price went up massively.
The only issue with this is that the closer we come to lifting lockdowns and supposedly returning to normal, the more likely these companies’ share prices will fall again. Since they were potentially overpriced due to the pandemic, this is just a correction of these prices.
These corrections doesn’t mean that they are bad investments now, but they wouldn’t be the best thing to invest in when their prices hit all time highs.
Timing the Market
So the struggle can come to figuring out when to invest. You want to invest when it’s cheap obviously, but when is cheap? And when prices suddenly fall, you might be tempted to sell immediately. But hopefully you’ll rarely have to sell out.
See the first thing you’ll want to do is make sure you know what you’re investing in. If you’re happy that it’s clearly going to grow and improve in the future, then you should never have to worry about selling it. It’s natural for stocks to fluctuate daily, but as long as the long term trend is going up, that’s all that matters.
Also, in reality you can never really predict when the best time to invest is. Regardless of whether it’s a pandemic or not, I think the best time to start is now. If a company is solid enough, then it will continue to trend upwards in price. Of course a pandemic does help a bit with getting discounts. And even now, there are still many good companies yet to return to pre-pandemic prices. But no matter when you invest, your trustworthy stocks should hold up for the long term, meaning for over 5 to 10 years.
So for myself, investing during a pandemic has been particularly beneficial. I’ve been very careful to choose companies that haven’t suffered too badly before or after the worst of the pandemic. The main thing is to stick to those reliable companies, and not to go wild and choose speculative but risky companies with no promise of a comfortable future. Patience and research are definitely the names of the game, and definitely try not to get hooked into any so called get-rich-quick investments.