Financial experts offer one piece of advice to investors five years on from Covid recovery

FINANCIAL experts have offered one piece of advice to investors five years on from the Covid recovery.

November marks five years since global stock markets completed their recovery from the Covid crash.

By November 2020, the MSCI World Index — a key measure of global equities — had regained all the ground lost during the pandemic’s March 2020 collapse.

Driven by unprecedented government stimulus and vaccine breakthroughs, it became one of the fastest market recoveries in history.

However, the recovery was uneven. The FTSE 100, hampered by its lower exposure to technology stocks and ongoing Brexit uncertainty, didn’t return to its pre-pandemic level until February 2022 — almost 18 months later.

Since then, investors have faced persistent inflation, rising interest rates, and geopolitical shocks. Yet, despite these challenges, global equities remain well above their pre-Covid highs.

Financial experts said the Covid recovery showed that urged investors should sit tight through turbulence in the markets.

Scott Gallacher, Director at Leicester-based Rowley Turton, said: "The Covid bounce back, and the continued market rises despite shocks such as Trump’s tariffs, underline why the best course of action for most investors is simply to sit tight — provided you have a well-balanced and well-diversified portfolio. 

"Of course, timing the market perfectly could, in theory, boost returns and reduce losses, but in practice very few people get it right. Too often investors panic and sell after bad news hits, like during the pandemic, and then wait too long to reinvest — often missing much or all of the recovery. History repeatedly shows that patience and discipline are far more reliable allies than short-term reactions."

Antonia Medlicott, Founder & MD at London-based Investing Insiders, said investors should be patient.

She added: "The Covid recovery is a powerful reminder that successful investors recognise that short-term turbulence is a part of a longer journey. We encourage people to take an evidence-based approach: that's an approach that is grounded in academic research, data, and decades of evidence, rather than speculation and short-term market sentiment. 

"And that shows us that successful investing is primarily about patience and discipline. The Covid recovery vividly illustrated this. Too many investors reacted emotionally, selling during the downturn. They were the ones who then missed out on the rebound that followed. 

"The lesson is clear: attempting to time markets, even during crises, risks causing harm that is far harder to recover from than sitting tight through the cycle. Markets are unpredictable in the short term, but over time they tend to reward those who have patience and stay invested throughout the cycle."

Samuel Mather-Holgate, Independent Financial Adviser at Swindon-based Mather and Murray Financial, said it is beneficial to have a diversified portfolio.

He continued: "The old adage of ‘time in the market, not timing the market’ remains ever relevant especially with talk of AI bubbles and global stockmarket overheating. The one thing that is known is there will be volatility in all markets, but knowing when a crash, or recovery, will happen is for the birds. 

“The unevenness of the Covid recovery also dictates the benefits of a diversified portfolio to take advantage of all markets across asset classes and geographical locations.”

Ross Lacey, Director & Independent Financial Adviser at Rayleigh-based Fairview Financial Management, urged investors to have a plan.

He said: "As with every stock market dip, it's easy to sit back after the event and analyse things. We're all human and it takes a lot of resilience, and a proper plan of action for what you'll do, to ride out periods of stock market decline when you're in the eye of the storm. 

"The biggest lesson is to consider what the plan is for next time this happens, and to accept there's no consistent way to predict when or why it'll happen, just that it will. Imagine it coincides with the point you're about to retire or need to draw a certain amount from your investments. Having a proper plan and being prepared for what the journey will look like so there's no nasty surprises is the key to investment success."

Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said people who kept their money invested during the Covid crash were rewarded.

He added: "The data overwhelmingly support the ‘stay invested’ narrative, with the gap between stock returns, 10% annually, and cash returns, ~3% annually, compounding dramatically over time. 

"Investors who stayed invested through March 2020's panic were rewarded not just with recovery, but with substantial real wealth creation that cash savers completely missed. The S&P 500 fell 34% in 33 days, the fastest bear market in history, yet recovered to new highs in just 126 trading days. 

"Meanwhile, investors who missed just the 10 best days between 2000-2020 would have seen their returns cut by more than half. Five years on, those who stayed invested despite unprecedented uncertainty have been vindicated. The question isn't whether there will be future volatility – there will be – but whether investors will remember this lesson when the next crisis arrives."