How 14 Experts Invest During The Coronavirus Pandemic

How experts invest during the coronavirus pandemic

The coronavirus outbreak has shaken the world as we know it – at least temporarily.

As a personal finance blogger, I have followed the development of the economy closely. Markets have been extremely volatile, unemployment is increasing like we haven’t seen in decades, and global growth forecasts look depressing.

The stock market has declined as investors have tried to protect their 2019 gains only to bounce back again with substantial support from trillions of dollars in relief/rescue packages.

If you are a private investor like me, the big question is then: How should you invest during the coronavirus pandemic?

Is it time to:

  1. Enter the market with a big bang (“be greedy when others are fearful”)?
  2. Exit all your investments before everything goes South (“let’s get outta here fellas”)?
  3. Weather the storm and do nothing (“just smile and wave”)?

Nobody can answer this question for you, but I wanted to hear what personal finance experts have done with their investments during the coronavirus pandemic.

I reached out to 14 of my favorite finance bloggers and asked them how their investment strategies had changed during the coronavirus pandemic (if at all).

I am happy I did. Here’s what they said:

How the experts invest during the coronavirus pandemic

"What happens tomorrow doesn't matter"

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My investment strategy hasn’t changed at all during Covid-19. I’m a long term investor. What happens tomorrow doesn’t matter. What happens next month and next year doesn’t matter. The market is volatile, but I’m in this game for the long run. I’m investing only in index funds. My portfolio consists of 70% MSCI World and 30% MSCI Emerging Markets. My portfolio was down 24% from ATH at the most at March 23rd. But since then my portfolio is now only 6% from ATH. There may be a new large drop down, but does it really matter if your holding period is 10+ years or even infinite?

by Route 2 FI, Blogger at Route 2 FI

"I can still (just about) afford to have some risky investments"

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My investment “strategy”, if you can call it that, is quite far from the “buy index funds until FI” advice that is very sound and should be followed. I figure at the age of 39 I can still (just about) afford to have some risky investments as well as index funds, which is what my pension and ISA consist of.

I also have a large cash pot to live off while I try to get a personal business venture off the ground, I literally just quit my job before the Corona stuff really kicked off in the UK.

So with all that background, it seemed wise to “be greedy while others are fearful”. I filled up my ISA for £20k at near the bottom, which was more luck than judgment, it would have been nice to buy more but we need to eat and pay bills.

You could say that this “Market Timing” has cost me and I should have just been averaging into the market each month, but that cash was never really set out for investing just yet. Anything I put into the market at low prices has been a bonus – well, time will tell!

by the FIREstarter UK, Blogger at the FIREstarter UK

"PANIC MODE"

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During the pandemic, I’ve initiated PANIC MODE!

I’m SO PANICKED that I’m going to miss out on the best buying opportunity of my generation that I’m not spending any money and I’ve upped my monthly contributions by double. My investment strategy has stayed the same (100% stocks, passive index fund) but I’m pumping as much into the market as I can physically afford. I have absolutely no doubt that COVID-19 will make me richer in the long term if I just stay the course and buy as much as I can.

by SavingNinja, Awesome Dude at SavingNinja

"Investing through the crisis"

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The two determining factors that guide my investment strategy are the availability of cash (over and above my emergency fund) and tax considerations.

Over the past few months, I’ve continued contributing into my workplace pension while my wife kept up her monthly contributions.

As soon as the new tax year began on April 6th, I’ve also opened a new Vanguard ISA and invested £10k into an S&P 500 index tracker.  We plan to contribute another £10k every month until we exhaust our £40k annual ISA allowance.  This allows us to ride out any near-term market volatility while retaining our ability to sleep well at night.

The only change we’ve made to our investment strategy as a result of Covid was to put a large real estate acquisition on hold. The property in question has a restaurant as a commercial tenant and one of the residential units is an AirBnB property, so we are waiting out to gauge the impact of the lockdown on associated rental income.

Other than that, our approach hasn’t changed.  Steady as she goes!

by Banker On FIRE, Founder at Banker On FIRE

"Nothing has changed"

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People think investing is dangerous. This is doubly true nowadays during the coronavirus pandemic.

People I know will ask me whether I’m worried that my portfolio is now worth 20% less. Or they’ll assume that my dividends have been affected and that my plan to reach FI has changed. But nothing has changed.

When you stop worrying about stock price fluctuations and instead think like a business owner, it’s very easy to stay calm. As long as the business can generate more money in the long run, you’ll also make money. It’s as simple as that.

What’s even better is that my dividends have barely been affected by the crisis. I’ve had a couple of small positions cancel their distributions, but the vast majority have kept increasing them.

This is why I love dividend growth investing. It’s so easy to be relaxed when you’re getting paid no matter what happens!

by Ricard Torres, Founder at Escaping to Freedom

"Time in the market, rather than timing the market"

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My investment strategy follows the standard FIRE mantra of “time in the market, rather than timing the market”. In other words, keep on investing, irrespective of the temporary conditions you find yourself in. This concept was backed up by a shocking Fidelity study which found that their most successful investors were actually dead.

While the recent market downturn has been a painful experience for many of us, combining this strategy with tax-efficient wrappers and broad-base funds has, fortunately, limited my losses.

One of the vehicles I use for tax-efficient investing is a Lifetime ISA (LISA) – a special investment tool available in the UK. For anyone unfamiliar with LISAs, the UK government contributes an additional 25% on top of what you invest. The gentle growth in the value of my funds, combined with the government top-up received, means my investments are still worth quite a bit more today than the money invested over the last year.

The one financial change I have made is simply increasing my cash buffer. I believe it’s a good time to trim your spending where you can, and pop your additional savings into an instant-access account ready for a rainy day.

by Richard Adams, Personal Finance Blogger at Frugality Magazine

"Uncertain times create opportunities for those who are prepared to act upon them"

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Governments have responded to the coronavirus pandemic by suspending vast amounts of economic activity. This, in turn, will trigger high levels of bankruptcy, business failure, mortgage default, and unemployment. The ripple effects will be both wide-reaching and long-lasting. Bailouts, social security, and central banks becoming the lender/investor of last resort mitigate the immediate impact. However, the financial hangover will be felt for many years to come. Uncertain times create opportunities for those who are prepared to act upon them. Astute investors will pick up bargains as distressed landlords and business owners seek to offload assets, sometimes at fire-sale prices. My overall investment strategy remains unchanged, though I anticipate an economic climate of lower yields, higher taxes, and increasing inflation. My cashflow posture has become more conservative. Consciously increasing my contingency fund to smooth out the bumpy ride ahead. Already some of my tenants are having trouble paying their rents, and some clients are being tardy paying my invoices. I have lines of credit in place so that I can act when attractive opportunities present themselves. Fortunes will be made and lost as pandemic waves ebb and flow over the next couple of years.

by { in·deed·a·bly }, Writer at { in·deed·a·bly }

"Business as usual"

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This pandemic showed more clearly what my risk tolerance is, to some extent. I’m still trying to not exceed my 60% equity allocation before entering FI. The sequence of returns risk can hit anytime and I need to protect myself against it before start de-accumulating. Boring as it may sound, I am still investing every month according to my pre-pandemic strategy. But I am now more confident that I can take more risk without losing sleep at night. Apart from some small speculative trades that are probably a bad idea, it’s business as usual at the Foxy Monkey headquarters.

by Michael, Blogger at Foxy Monkey

"We won't be making any changes"

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First of all, we are definitely not experts, so please don’t act upon anything we say. Do your own research!

We are FI and our rental real estate income covers our living expenses. We won’t be making any changes to that strategy because we don’t feel that we need to.

The only thing we did during this crash is to invest some money in World ETFs and oil companies. We feel like we’re at the beginning of a recession and generally the stock market is too optimistic. Mostly shares are still overvalued. We know this is a kind of market timing since nobody knows the future.

by Mr and Mrs W, Bloggers at What Life Could Be

"Everything has changed except one thing"

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Covid-19 has fundamentally changed not only what I do at work but also my home life. However, the one thing that hasn’t changed much is my investment strategy.  The amount I am investing has increased, but that’s something I had planned for years in advance rather than with the intention of taking advantage of the current market volatility. Being in the public sector, both Mrs. CfC and I know what our pay will be years in advance so we can plan our cashflow way ahead of time. So in short; there has been no change in strategy for us. Still investing according to our plan and don’t intend to sell a single unit for many years to come. Sounds boring I know, but there’s nothing wrong with sticking to a tried and tested formula. Keep calm and carry on.

by Cashflow Cop, Blogger at Cashflow Cop

"Keeping calm and carrying on"

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There has been no change in my investment strategy.

In March, when the stock markets tumbled to a record drop, the only thing I did was rebalance my portfolio by selling some of my bonds (which were up) and topping up some of my investments (which were massively down).

And that’s it. I have remained invested in equities (85% of my entire portfolio) and have continued to invest on a monthly basis. Right now, my portfolio is about 8% down from what it was at the beginning of the year.

I can’t say that I’m ‘being greedy when others are fearful’ as all I’m doing is sticking to my plan.  I didn’t have a spare pot of money, waiting for the markets to drop – all the money I intend to invest gets invested straight away. Does this mean that I miss out when the market bottoms out? I don’t know and don’t really care for market timing!

by weenie, Blogger at Quietly Saving Blog

"My strategy remains unchanged"

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Overall my strategy remains unchanged. ~80% of my Total Balance is currently invested in properties. The pandemic has taught me that only a few retail sectors are “pandemic safe”. I will be keeping this in mind when looking for my next big property investment.

I only invest in stocks via my (employer-provided) pension. In January I set a fairly conservative AA on my pension (<35% stocks), which I have tweaked slightly since (<45% stocks), after the decline in March to hopefully regain some of the loss. Like many others, I’m wondering whether the stocks have seen the worst for now, or whether there will be another (bigger) drop again later this year. Only time will tell.

About 10% of my Total Balance is currently invested in Crowdlending on various European platforms, both P2P and P2B. The P2B market is very challenged by the lockdown, and I think platforms in this segment will struggle to survive.

I am a bit of an opportunist, though – so I have used the stock drop to re-acquire a REIT that I’ve owned previously.

by Nick, IT Ninja (and FIRE blogger) at Total Balance

"Holding on and increasing cash"

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My investment strategy has really been keep doing what I am doing which is keeping my money in long term ETFs. It was painful watching the market plummet, but awesome watching it come up again. The main change is I’m adding cash to my emergency fund in case something happens to my main income. My industry is particularly susceptible to economic downturns and I think I would rather have the cash available should my job disappear!

by Playing with FIRE UK, Owner at Playing with FIRE UK

"This situation only changed one financial aspect"

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For us, this situation only changed one financial aspect. For this year the plan was to fill up our emergency fund to reach one year of living expenses (basic/same level/optimal cases) and also do some home renovations (changing windows). This last one can count as an investment as it raises the value of our home and helps us save on heating costs. The change is only in the order, the renovation is postponed until the situation eases up and we see how serious will be the recession down the road. Until that we save what we can. It is even easier now as you spend only on necessities (and some gardening stuff of course). My opinion as someone who has no skin in the investing game is that this situation should not change plans at all just be more thought out and cautious. If you invest in highly diversified ETF-s they will probably perform as always, mirroring the world economy and the current situation should not have a serious effect on multiple decade timescale. If someone is picking stock or bonds he should be more cautious about checking the fundamentals and the quality of the equities.

by HCF, Blogger at [HALT CATCH FIRE]

As you can read, most of the bloggers stay the course. They make small adjustments, but they don’t rush out and change the entire strategy. Nobody has panicked, and a few have taken the opportunity to invest while stock prices are 20% lower compared to all-time highs. In my opinion, this is exactly how the crisis should be handled.

As most of the experts, I have kept on investing regardless of the development in the market. I have saved more money from being isolated and therefore invested more during this pandemic. I invest with a long time horizon and I can afford large dips in the investments (even losing the entire investment). This is why I don’t care what goes on in the market. As long as capitalism rules growth is a prerequisite for the survival of the system, I am not changing my course. Coronavirus or not.

Luckily, my fellow finance bloggers agree.

I hope you are inspired to follow a similar path during the next months or years that the coronavirus will continue to impact our lives and investments.

Your turn: How has your investment strategy changed during the coronavirus pandemic (if at all)?

6 comments

6 comments

Cath Dyson May 3, 2020 - 15:16

Great article, really like the wide spread of experience. Its interesting to see the similarities across the contributors as well as understand their differences.

Reply
Carl Jensen May 5, 2020 - 08:21

Thanks, Cath! I also liked the subtle differences in the different contributors’ approaches 🙂

Reply
weenie April 29, 2020 - 14:20

Thanks for including me, Carl. Almost as if we met up in advance to decide on what we were all going to say, except that we didn’t! 🙂

Reply
Carl Jensen April 29, 2020 - 15:06

Yes, exactly! Great minds think alike 🙂 Thanks for contributing!

Reply
Nick April 29, 2020 - 13:56

“IT Ninja (and FIRE blogger)” – gonna put that on my calling card now 😛

Thanks for including me in the roundup!

Reply
Carl Jensen April 29, 2020 - 15:05

I think you should 😉 I am happy you wanted to participate.

Reply

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