The worldwide public health emergency created by the coronavirus pandemic is, according to most experts, going to create a global recession.
All major economic downturns produce a new world – this one will too in a variety of key ways – and we must all adapt in order to successfully build, grow and protect wealth.
For instance, internationally we’re moving towards an era of negative interest rates. And whilst the jury is out on whether negative interest rates help the real economy, there is no doubt that they help boost financial asset prices.
As such, many people are now seeking to top-up their investment portfolios with high quality stocks by taking advantage of lower entry points.
Those with savings in the bank are already getting battered by the ultra-low interest rates they are getting, and the negative rates will give more people more reason to increase their exposure to equities and other assets.
The recovery from the recession can be expected to speed up the so-called Fourth Revolution, which is fuelled by new technologies and digitalisation. New industries will come into their own and, as ever, there will be winners and losers. This will mean job losses in some sectors and huge – possibly unprecedented – job and investment opportunities in others.
Big Pharma and big tech are just two of the probable winners. The likes of Pfizer, Johnson & Johnson, Novartis, Apple, Facebook, Amazon, and Google’s parent company Alphabet have immense cash reserves to continue, maybe even bolster, research and development and to sustain their supply and business operations.
These sectors are also likely to face higher demand as the world grapples with the public health emergency and as social distancing, isolation and quarantine affect much of its existing and potential consumer base.
In addition, regulatory restrictions are likely to be lowered and political goodwill towards these sectors and the firms within them is likely to be considerably increased.
We can be in no doubt that the world has already changed because of the coronavirus pandemic – and it will do so more and maybe at a faster pace. The shifts will impact people’s finances, potentially including in terms of foreign exchange, pensions and retirement planning, investments, and tax planning, amongst others issues.
There will be a new normal and it would be sensible sooner rather than later to reassess your financial strategies to ensure that you remain on track to reach – if not, exceed – your long-term financial objectives by mitigating the risks and taking advantage of the inevitable opportunities that arise during times of enhanced volatility.
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