3 Lessons Australian Investors Can Learn from the Pandemic

Author: Janelle Kirk

If there’s anything to take away from the COVID-19 pandemic, it’s that the conditions that we were all put in have made room for lots of lessons to learn.

Whether you spent most of the lockdown working at home or putting your life on the frontlines, living in these trying times has paved a path for us to learn many important lessons along the way. From matters concerning safety to appreciating what we have, the pandemic has forced many of us to reflect and prepare accordingly.

One lesson that stands out is being smarter with money and your investments.

Investment Performance in the Time of the Coronavirus

Since the pandemic arrived on Australian shores in March 2020, trouble brewed in the country’s financial markets with risks of business closures and travel restrictions.

Once industries faced these hurdles, many were quick to act in haste and withdrew their stakes. Unfortunately, this resulted in a near-instantaneous landslide that made way for an ongoing financial crisis—the impact of which continues to this day.

Halfway through the pandemic, however, something remarkable happened: the performance of financial assets began to climb again and shares began to rebound faster than expected. Up until recently, Australian shares rose 28%, while Balanced-Growth Superannuation funds rose up to 18% in the same period.

Lessons Australian Investors Can Learn from the Pandemic

Given the implications brought about by the rollercoaster that is the Australian economy in the current pandemic, forward-thinking investors need to learn the best ways to allocate their assets. If you’re looking to improve your approach and make up for the lost time (and financial losses, in general), here are a few key points that COVID-19 has emphasised for investors to learn ASAP:

1. Keep Investments Diversified

This is a classic lesson that has been taught time and time again by financial advisers; diversification is now of greater importance thanks to COVID-19.

Based on Newcastle Financial Planning Group’s client experiences for the past 18 months, many clients that recovered their losses had diversified portfolios. This approach works because it allows anyone to minimise the impact of one bad investment while smoothening out returns in the long run.

In the current investment climate, where various sectors can fall and rise instantaneously, mixing things up in your portfolio can help you recover. It should perform well in the long run!

2. Whether You Think You Can Afford It or Not: Ignore the Noise

One of the most valuable lessons that the COVID-19 pandemic is that ignoring the noise pays tremendous dividends.

You see, much of the financial difficulties the Australian economy endured in the first few months of lockdowns was because of impulsive decisions and “panic selling”. And while investors are naturally an intelligent bunch, doomsayers and aggressive pessimists got the best of them.

More than anything, the ultimate reason it pays to ignore the noise that goes on in markets today is: the best investment decisions are made with cool, calm, and collected mindsets because the underlying value of long-term investments outweighs short-term fluctuations.

3. Stay On Track with Your Superannuation

Another key learning point is that it pays to stick to the plans you set out with your superannuation.

Among the different tools that you’ve most likely invested in, superannuation are the vehicle you should keep an eye on. Avoid premature withdrawals since this can significantly jeopardise your long-term plans. Fortunately, you can still recover despite the hasty decisions you made by enlisting the help of our experts that will provide you with quality superannuation advice!

Bottom line: Every Challenge is A Learning Opportunity! 

While the COVID-19 pandemic has posed challenges to Australian investors, the investment lessons it imparts applies to everyone seeking financial growth and stability. Through these key learning points, you can take the right steps towards improving your portfolio and future-proofing it with every decision you make.

Newcastle Financial Planning Group specialises in Australian super funds for investors of all kinds. If you’re looking for a accredited financial planner that can help you take advantage of opportunities found within superannuation in Australia, get in touch with us today!

Want to learn more tips about investing and wealth creation? Check out these interesting blogs!

• The ultimate post-retirement investment guide 
• Understanding Investments: What Kinds Are Suitable For Me? 
• 5 Essential Strategies for Buying Investment Properties in Australia 

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.