Investing beyond Covid-19 | What investment strategies should investors adopt in 2021? (Part 2)
The Covid-19 pandemic dominated headlines for much of 2020, with all the drama of a typical soap opera. And markets responded alongside the ebb and flow of investors’ sentiment. What can we learn from 2020? And how should we invest in 2021?
In our “Beyond Covid-19” series, we speak with experts in different fields to learn how we can learn from the hard lessons of 2020. The second of our investing experts is Lena Teng, Lead of Solutions and Investments at MoneyOwl.
1. What were some investing strategies that worked in 2020?
What worked well for our clients and ourselves was keeping our investments going through this period of market volatility, and putting our spare cash to work by investing more between the end of February and March when markets continued to fall. Looking at the direction of the markets at that time really tested our faith in the principle that markets always recover in the long run. Our team of client advisors remained committed to helping each client maintain their investments throughout this challenging period. We sent our clients weekly updates on market movements, and even encouraged them to top up their investments at opportune times, while dedicated client advisors were available at all times for advice and assurance.
Of course, this strategy only worked because we were invested in a globally diversified portfolio. Despite the acute economic duress, and the fact that some companies folded, our risks were cushioned by many other companies that thrived in the wake of COVID-19.
2. What were some investing strategies that did not apply in 2020?
For long-term investors who seek to achieve consistent and reliable market returns to support their life and financial goals, making hasty decisions about when to enter or exit markets could be incredibly risky, especially during such turbulent times. The speed and magnitude at which the markets changed directions in 2020 meant that there were potentially disastrous results for some investors, with languishing returns for those who failed to time their decisions well. For example, those who missed the 10 best days in 2020 would have experienced a -44.2% return, compared to an average return of 15.5% if they had just remained in the markets throughout.
3. How would you recommend someone to invest in 2021, in light of what happened in 2020?
At MoneyOwl, we stick to our four time-tested principles of investing – stay invested for the long term; diversify broadly across countries, markets, sectors; invest according to your risk profile; and keep investment costs low. These principles apply regardless of whatever is happening in the markets.
4. What does MoneyOwl do to help investors invest wisely?
MoneyOwl adopts a holistic approach to investing.
For clients who invest directly through our online platform, they will first complete a self-assessment of their financial situation and risk profile. This helps us to recommend a suitable portfolio mix of equities and bonds. A portfolio that suits our client’s risk appetite is fundamental to helping them retain their investments in the face of market turbulence.
For clients who engage us for our Comprehensive Financial Planning service, we develop a more comprehensive assessment of their current financial situation, protection gaps and life goals. Dedicated client advisors will recommend optimal investment strategies that allow our clients to straddle between living meaningfully today and working toward future goals. Understanding these investment objectives goes a long way in helping our clients stay on track in their investment journeys.
We also continuously develop and introduce innovative investment solutions that would meet client’s needs at different stages of their life. Our client advisors provide regular updates about the latest market movements or regulatory changes that could affect clients’ financial plans.