Important Information: Please be aware that the value of investments can go down as well as up, and so you may get back less than you invest. The information in this article is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser. Tax treatment depends on individual circumstances and all tax rules may change in the future. Investors should note that the views expressed may no longer be current and may have already been acted upon 

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It is such a weird time isn’t it? I don’t know about you, but I’ve not been loving 2020! The coronavirus crisis and the lockdown that has come with it has impacted our health (mental too) and of course, our finances.

There are a lot of people who have lost their jobs or don’t have as much work coming in who are really struggling with money. However, that’s not everyone’s experience. 

I was on Twitter the other day, asking how everyone was doing with their cash and it genuinely surprised me that most people said that they’re doing well. This is because they have been lucky enough to keep their jobs – so don’t have travel expenses at the moment and can’t socialise (and maybe have had expensive holidays cancelled), meaning they’re actually managing to save money.  

With this, and with the market being as volatile as it is, lots of people all over my socials have been asking me if now is a good time to invest. 

So – I got the boffins at Fidelity involved. I asked you for your questions about investing and I have answers for you from Fidelity’s experts.

Hopefully everything you’ve ever wondered about investing during this time is covered here, but if not here’s a good place to start.

Your coronavirus and investing questions 

Q. What is best to invest in at the moment? Property possibly?

The best and safest investment portfolio is a well-diversified one, so a mixture of different assets, as well as different geographical regions and different investment providers makes sense. As they say, don’t put all your eggs in one basket. 

Commercial property may actually be one of the harder hit areas of the economy by the Covid-19 pandemic thanks to a shift away from working in offices and the shutdown of many shops. 

Office and retail are big parts of the overall real estate mix. As for residential property, demand for houses is closely linked to the employment situation. If the jobless numbers rise then the housing market may pause for breath.

Q. I have a load of company shares which I was thinking of selling and reinvesting more diversely before this kicked off but I have no idea what to do now!

Hindsight is a wonderful thing. I guess many of us wish we had done things a bit differently in February before the crisis hit. 

Thanks to massive stimulus by governments and central banks, stock markets have actually rebounded a lot further and more quickly than many people expected. 

If you are sceptical about whether the rally is sustainable this may have provided a second bite of the cherry to diversify your portfolio as you were planning.

Q. If you had £500 to invest would it be better in an ISA or shares?

Don’t forget that an ISA is just a tax-favoured wrapper. It can hold shares as well as cash so you could have both shares and an ISA. 

The amount is not the key question. What matters is your time horizon. 

If you are not able to invest for five years or more then I would suggest you stick to a more liquid investment such as cash. If you do not need the money in the short to medium-term then history suggests the stock market is an excellent home for your long-term savings.

 Q. Is it a good time to invest in telecommunications?

The Covid-19 pandemic has forced many people to work from home which has put enormous strain on telecommunications infrastructure globally. 

If you are looking for a sector that could be a beneficiary of coronavirus then telecoms could very well fit the bill. Our lives are only going to become more digital and more connected as time goes by.

Q. What is an ETF?

An ETF is an exchange traded fund. It is a portfolio of investments, sometimes designed simply to track the performance of an index, which can be bought and sold throughout the trading day, just like a company share. 

The main attraction of an ETF, other than this ability to be traded frequently, is its cost. They can provide exposure to a market or theme more cheaply than a traditional open-ended fund.

Q. I like the sound of investing but would not want to risk any hard-earned money. Is investing for me?

You are right to question whether investing is for you if you are concerned about preserving your capital. In the long-run shares have given investors a much better return than apparently safer assets like cash. 

But the price you pay for that long-term outperformance is short-term volatility. Stock markets go up and down and this can be hard to stomach, especially if you are new to investing. 

The best defence is to make sure that you only invest if you are in it for the long-term, to allow the ups and downs of the market to even out, and to be well-diversified.

Q. I’m looking to get into investing and I’m thinking of trying to get into companies that pay dividends. Is it better to do that or go for a fund? I know share prices are low(ish) at the moment so it feels like a good time to start buying in.

Dividends are a hot topic at the moment. Many companies have announced cuts in their payouts due to the impact of the Covid-19 pandemic. 

You can invest in dividend paying companies via a fund specialising in this type of investment, usually called an equity income fund. These types of funds have been out of favour for some time now so there may be some good opportunities to pick them up at attractive prices.

Q. I was going to increase the amount of money I put into my stocks and shares ISA each month, but now I’m holding back due to the volatility of the market. Is that the best thing to do?

Increasing the amount you invest as time goes by and maybe your salary increases is very sensible. It will help ensure that you keep up with inflation over time. 

I would say that market volatility is not a good reason to hold back from investing. Often the best opportunities arise during moments of volatility because the stock market tends to overshoot in both directions. 

When investors are nervous, prices can fall to attractive levels. The best way to get round the uncertainty of when to invest is to save regularly, drip-feeding money into the market over time.

Q. What is the best way to offset risk right now? I don’t want to stop investing but should I continue putting my monthly sum in or just pause for a few months?

The best approach to investing, especially in volatile markets, is to take the emotion out of the process by drip-feeding your money into the market. 

This way, you will invest when it feels least comfortable to do so. This will often be the best time to do so because nervous investors can often push prices to attractive levels.

Q. How much is a good amount to start investing with?

You can start investing either with a lump sum or by setting up a regular savings plan with as little as £50 a month. A regular savings discipline is good for many reasons. It means you will invest through the ups and downs of the market. 

If the money is automatically deducted from your bank account, you are also more likely to stick with it when markets are not so smooth.

Q. In a market like this that’s a bit scary at the moment, is diversifying the best way to go to reduce risk?

You are spot on. Diversification is one of the best ways to handle market volatility. By investing across different asset classes and in different countries around the world you will create a much smoother investment journey and that means you are more likely to stick with your plan.

Q. I know investing is for the long term but how do I know how much to put in an ISA vs a pension? A bit of both?

ISAs and pensions both enjoy tax advantages. A pension will give you tax relief at the time you invest the money but you pay tax when you draw the pension. 

An ISA is invested out of taxed income but is sheltered from tax thereafter. A pension ties up your money until the age of 55 whereas an ISA can be accessed at any time. 

You are right, a balanced savings plan will probably have a bit of both.

Q. My wife has shares in the company she works in and she purchased shares which we weren’t going to cash in for at least 5 years. The 5 years is this year but due to the share price dropping shall we just keep hold of the shares?

Investing in the shares of the company you work for is how many people get into stock market investing. It’s a great introduction and often you are able to buy the shares at a discount, which is helpful. 

If the shares are currently at a low level, you should ask yourself whether you think the problem is temporary. If so, it would be a mistake to crystallise the value of the shares at this depressed level. 

Q. Do you think investors should hold off for now as there’s still potential stock market pain to come, or the equities rally will continue upwards and now’s the time to invest?

This is a very difficult question to answer because the Covid pandemic has made predictions about the future even harder to make than usual. It is also true to say that the stock market has been lifted quite far by the massive stimulus measures from both governments and central banks recently. 

However, the counter argument is that shares are, in many cases, well below the levels they reached in January and February this year. Buying at a depressed price stacks the odds in favour of a good outcome.

Q. I’ve been with the same provider for a number of years now. Should I be reconsidering the amount of my current monthly investments at the moment?

It is always sensible to revisit the amount you put aside each month. If your salary is rising then it makes sense to increase the amount you are saving too. If you don’t there is a danger that you will fall behind your investment goals.

Q. I’ve heard lots about emerging markets and ETFs but what experience is needed to interpret the offerings and offset the risk?

If you are new to investing, I would avoid being too focused with your investments. If you are inexperienced you run the risk of putting all your eggs in the wrong basket at the wrong time. A well-diversified fund, invested globally, is a good starting point.

Q. To balance volatility I know I need bonds, but how do they actually work compared to stocks and shares?

A bond is essentially an IOU. The issuer (sometimes a company, sometimes a government) promises to repay the amount you have lent them at a predetermined time and in the meantime they promise to pay you a yearly income (called a coupon). 

Bond-holders are further up the pecking order than shareholders so bonds are usually a safer investment than shares. The price you pay for this is often a lower income. 

It’s worth remembering that the promise to repay the capital only applies if you hold the bond to maturity. in the meantime, it’s value will move up and down according to changes in prevailing interest rates and the laws of supply and demand. 

You are right, though, a balance of bonds and shares in a portfolio is a good idea.

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I hope you enjoyed that and feel a bit more confident about investing during this time if you were considering it. If you have other questions, it’s totally worth Tweeting or contacting Fidelity.

If you want to learn more about investing with Fidelity during uncertain times, check out this post.

This is a paid collaboration with Fidelity. However, as you know – I only ever work with brands and companies I would recommend anyway and I have complete editorial control over my blog (which means I won’t let anyone tell me what to say – ever).