How to Invest in Markets Rattled by Coronavirus (or any crisis)

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How to Invest in Markets Rattled by Coronavirus (or any crisis)

Economic Climate

The worlds’ media has become obsessed with the global spread of coronavirus or Covid-19. On the morning of March 11th 2020, the Bank of England announced a cut of interest rates down to 0.25% as part of a package of emergency measures to support the economy through this health crisis.

Lower interest rates are good news for borrowers and bad news for savers because High Street banks use the Bank of England base rate as a reference point for many mortgages and savings accounts. In other words, while your mortgage payments may become cheaper, returns on your savings will also reduce in amount.

The economic climate around the world is shaky as nations pool resources to contain the spread of coronavirus. For British investors who have just heaved a sigh of relief after Brexit uncertainty, another wave of complete unpredictability and extreme volatility is on its way.

Hysteria and Market Perception

It is fair to say that corona hysteria created by the media is dictating market movements. In fact, it really illustrates how market value is all about perception.

In the case of coronavirus, headlines are affecting stock prices, commodity values and even exchange rates, and injecting untold amounts of uncertainty for investors. While this volatility may provide opportunity for traders, for the average investor it massively increases risk and the potential for loss.

There has never been a more compelling argument for focusing on non-correlated investment sectors, where the wider market uncertainty and volatility has no input. One way of removing the direct input of the markets is to diversify into fixed term, fixed return investment types where your returns are set in stone from the point of entry.

 

Using Fixed Yield Investment to Weather the Storm

2020 was always going to be a fiery year on the political front, with the US Presidential Elections, Brexit and now Covid-19 thrown into the chaos. Research shows that people and businesses who are able to weather times of economic difficulty are much more likely to enjoy a healthy financial future.

However, that’s easier said than done, particularly if you are invested in stocks and shares which have recently seen the most volatility of all markets. Big falls in prices are easy for people with deep pockets to manage and stockmarkets always correct at some point down the line. But for the rest of us, when share prices start falling, we have to decide if we can afford to sit out the panic and risk losing our shirts.

Protecting your capital with fixed yield, secured debt investments is the rational answer. You want to be sure your money isn’t influenced by interest rates, inflation or any other kind of variable.  A fixed yield allows you to calculate exactly how much your returns will be, which really reduces stress levels during uncertain times.

Furthermore, you don’t have to keep a close eye on your investments when you have chosen a fixed yield product. This is particularly important now we’re in a time where every day brings new and more dramatic headlines to shake things up.

Perhaps the most attractive types of secured debt investments are those in residential or commercial property markets. This is mainly because the property market moves at the slowest pace of all, because all the assets in the market are of significant value. It makes sense that you can’t shift a house as quickly as you can shares, which makes the property market much less volatile.

Playing it safe is important during times of financial uncertainty. Fixed yield secured debt investments take away the stress of closely monitoring markets for price moves that could be potentially devastating. If you are looking for a way to protect your cash as coronavirus continues to wreak havoc around the world, speak to one of our advisers today.