Shifting Investment Patterns: Post-COVID Dynamics in Individual Investments

Ms. Shinki K Pandey

HoD, Department of Management

Kalinga University

shinki.pandey@kalingauniversity.ac.in

Overview

The COVID-19 epidemic caused a major change in the worldwide economy, greatly affecting how people manage their finances and make investments.   Amidst pervasive uncertainty and turbulent conditions in traditional markets, individuals globally reassessed their investment plans.   This essay explores the subtle shifts observed in the investment behaviours of individuals after the COVID-19 pandemic.

1. Emergence of digital investment platforms

An evident and notable change in investment behaviour was the significant increase in digital investment platforms.   The pandemic expedited the use of online investing channels, as individuals pursued convenience, accessibility, and autonomy in managing their money from the security of their residences.   There was a significant increase in the usage of robo-advisors, investment apps, and online trading platforms.

References: Deloitte’s “Global Digital Banking Consumer Survey,” published in 2021, and CNBC’s article titled “The Pandemic Pushed Retail Investors Online.”   The year is 2020.

2. Predilection for durable and environmentally-friendly assets.

The pandemic-induced instability in conventional markets led to a transition towards investing alternatives that are more robust and environmentally friendly.   There has been a growing trend among individuals to invest in sustainable funds, ESG (Environmental, Social, and Governance) investments, and industries that are resistant to market swings, such as healthcare, renewable energy, and technological advancements.

References: Morningstar’s report titled “ESG Investing After COVID-19” from 2021, and Forbes’ article titled “How COVID-19 Changed ESG Investing” from 2020.

3. Prioritise the allocation of resources towards emergency funds and long-term planning.

The epidemic served as a clear and powerful reminder of the significance of being financially prepared.   People focused on establishing emergency reserves as a top priority and placed significant importance on long-term financial preparation.   Investors increasingly favoured stable, predictable, and secure investment opportunities, thus minimising their involvement in high-risk operations.

Sources: McKinsey & Company’s report titled “Financial Planning in the Age of COVID-19,” published in 2021, and Harvard Business Review’s article titled “Preparing Your Investments for a Post-Pandemic World.”   2020. 4. Reallocation of assets throughout investment portfolios.

Investors were prompted by the economic concerns to review and redistribute their portfolios.   The adoption of diversification as a crucial strategy involved transitioning from volatile assets to investment baskets that offer greater diversification.   A significant number of individuals opted to readjust the composition of their investment portfolios, making changes to the distribution of assets in order to reduce potential risks and take advantage of new and promising prospects.

Vanguard’s publication titled “Portfolio Rebalancing in Volatile Markets.”   Charles Schwab’s article titled “The Importance of Diversification” was published in 2021.   In 2020, there was a surge in interest towards cryptocurrency and alternative assets.

The pandemic era had a notable increase in both interest and use of cryptocurrencies and alternative assets.   Individuals, in search of greater profitability and portfolio diversification, ventured into alternative investment options beyond conventional stocks and bonds.   Cryptocurrencies, NFTs (Non-Fungible Tokens), as well as alternative assets such as precious metals and collectibles, have gained popularity.

Refernce:

1. Deloitte. (2021). Global Digital Banking Consumer Survey.
2. CNBC. (2020). The Pandemic Pushed Retail Investors Online.
3. Morningstar. (2021). ESG Investing After COVID-19.
4. Forbes. (2020). How COVID-19 Changed ESG Investing.
5. McKinsey & Company. (2021). Financial Planning in the Age of COVID-19.
6. Harvard Business Review. (2020). Preparing Your Investments for a Post-Pandemic World.
7. Vanguard. (2021). Portfolio Rebalancing in Volatile Markets.
8. Charles Schwab. (2020). The Importance of Diversification.
9. CoinDesk. (2021). Crypto’s Big Year in 2021.
10. CNBC. (2020). Investing in Alternative Assets.