One question I’m often asked when the COVID-19 pandemic began was whether it is safe to invest or not.
Investing is one way you can make your money work for you. Once you invest your money, you are purchasing a share in a company or an asset in the hope of a future income or growth.
It is a must for the following reasons:
1. Investing is one way you can make money work for you
2. Investing offers more potential for growth rather than parking your money in typical savings account
3. Investing can beat inflation
4. Investing helps you earn compound interest
However, investing can be a daunting task especially in the current situation we are in. The COVID-19 pandemic truly changed our life and it brought a lot of fears to investors. Most are hesitant to invest their money considering how volatile the situation is.
Disclaimer: Thank you to Megawide for partnering with me in this post and providing the research material. All opinions are 100% my own.
In today’s post you will learn the following:
- Key things to keep in mind when investing so you can minimize your exposure to risk during this pandemic.
- Resilient sectors you can rely on when it comes to investing
- Final thoughts and guidelines when investing during pandemic
I would like to put a disclaimer first that this post is for informational purposes only and should not be considered financial advice. I am not a licensed financial advisor. Please exercise caution with your hard earned money.
4 Key Things to Keep in Mind when Investing during Pandemic
Make sure you have an emergency fund
If you’ve been on SavingsPinay.ph since the beginning, you may have encountered the term emergency fund a lot of times already.
Emergency Fund is the money you set aside for emergency situations. These emergency situations are but not limited to the follow:
- Job loss
- Accident or medical emergency in the family
- Natural disaster
Your emergency fund is your first line of defense in case something goes out of hand. Think about it, when an unexpected event happens, how will you pay for it?
An emergency fund helps you avoid taking from your main salary and ruining your budget, or getting into the debt trap.
With the ongoing enhanced community quarantine due to COVID-19, a lot are forced to work from home. This is a great opportunity to bulk up your emergency fund.
Use any amount you will save from transportation, lunch allowance, dine-out with friends or alone, etc. and put them in your emergency fund. If you have yet to start an emergency fund, start one!
Build your baby emergency fund and save up at least Php 10,000 in a separate saving account.
Related read – Emergency Fund – What, Why, and How
A budget acts like your own compass in achieving financial freedom. It is an estimate of your income and expenses over a set period of time. Normally done on a monthly basis, budgets work to:
- Allocate your salary/income/money wisely
- Know how much is coming in and going out in your cash flow
- Identify the areas where you can spend less to save more
Now that the COVID-19 situation is apparent and still developing, it’s best to take a look at how you budget your money and keep it as effective as possible.
Take a look at your recurring expenses and see where you can cut down. Given the numerous extensions announced by not just utility companies but also banks, it’s only fitting that you adjust your budget accordingly.
Have a reminder of which bill you need to pay next. Ensure that the extension will not cost you more instead.
For me, still stick to the usual payment schedule if your money permits and you have enough in your savings account. However, if money is tight you can take advantage of the extensions instead.
Stay informed and stay safe
Now more than ever, it’s crucial to stay informed with what’s happening. Pay attention to financial news so you can protect yourself against scams. This will also allow you to know factors that affect the economy which contributes to the performance of the stock market.
Trust that there’s always room for recovery
With the massive vaccination happening already in the local government units, we can see the Philippine Stock Exchange Index (PSEi) is getting better. The Asian Development Bank (ADB) expects the Philippine economy to recover with a growth of at least 4.5 percent this year and 5.5 percent in 2022. And there are key sectors we can still have confidence in despite the COVID-19 situation.
Where should you invest?
Here are resilient sectors we can rely on as we invest during these trying times:
Industries in food manufacturing and essential stores such as groceries, were able to stay afloat year-round in 2020. They continue to be the sectors that thrive in the present. Food has always been part of the vital sectors and has grown as well thanks to food deliveries.
Telecommunications is another resilient sector. The ongoing shift to remote work has driven continued demand to the telecommunication industry. The pandemic has brought a lot of realities including the importance of good network infrastructure to keep any business, no matter how small or big it is, stay connected amidst the social distancing and working from home. This includes the government, education, and other societies.
Other industries such as property and construction that have been hit harder at the start of the COVID-19 pandemic are now driving economic growth according to some experts.
The construction industry is one of the underrated sectors during this pandemic. But did you know that in the Philippines, the construction industry is expected to bounce back in 2021 and grow at an annual average rate of 8.3 percent from then till 2024? Source: Data and analytics firm GlobalData in an August 20 note.
The sector has been a major contributor to economic growth, with construction gross fixed capital formation accounting for nearly P3 trillion in real terms, or 1.8 percentage points of the 6.6% average GDP growth over the past four years.
One firm that is clearly focusing on public infrastructure projects is leading engineering and infrastructure construction firm, Megawide. The company’s diverse portfolio and dynamic nature has allowed them to navigate the pandemic.
Megawide broke even amid the continued challenges, with revenue continuing to sustain the momentum since the second quarter of 2021.
Last year, Megawide’s construction business contributed P10.8 billion or 84 percent of total revenues. 2020 ended with 21 live projects, with negotiations with clients ongoing. Noteworthy infrastructure projects include the Mactan Cebu International Airport (MCIA) and Paranaque Integrated Terminal Exchange (PITX).
Both MCIA and Clark International Airport’s new terminal have proven that world-class and transit-oriented development can be achieved and accomplished, even in the middle of the pandemic.
In the final quarter of 2020, Megawide won new contracts amounting to P34.8B and ended the year with orders worth P68.4B, an indicator for future revenues.
They are also in the middle of redevelopment of the Carbon Public Market as a world-class facility divided into six blocks that will feature a 24/7market, lifestyle village, and the first in-city check-in facility in the country.
With construction projects resuming since mid-May last year, new jobs generated by the construction industry for this year will be substantial. Government infrastructure projects, themselves, are creating 1.7 million direct and indirect jobs.
Truly, infrastructure can create a multiplier effect in the economy. Besides the benefits one can attain from the construction phase alone, such as job production, a ripple effect of market activity can also be achieved in the community it is built on. This means, for example, allowing mobility and fostering new business opportunities.
Final Notes from SavingsPinay
As hard as it seems, I highly encourage you to stay invested. I do get how scary the current situation can be but now is not the time to stop investing.
Focus on the long term. If you are in the stock market for the long run, stick to your plan. Here are the few things that will help you as an investor during this trying times:
- Stop checking the stock market every single day.
- Remind yourself of your financial goals.
- Remember that the negative you see is just paper loss unless you withdraw them.
- Think of this as a bazaar where every stock is on sale!!!
- Read stories on how the market behaves for the past years and believe that corrections, such as what is happening now, are normal. On the average, the market will always go up.
Follow your usual investment schedule or add more if you can. For many, even for me, this is my first market crash experience. It’s really depressing to be honest so I just stopped looking completely.
But I never stopped investing as much as I could.
The COVID-19 pandemic has greatly affected the market and our life. And we will never know when this will end. What we know is this, too, shall pass.
So for now control what you can control. Your emotions, your actions, your decisions, and your emotions. Just stay calm.
It may take many months or years, but the market will recover. Remember, time in the market is better than timing the market.