A New Era: 4 Investing Lessons We’ve Learned From the Pandemic


If there is one thing everyone can agree on about the pandemic, it’s that it fundamentally changed how we do even the simplest things. COVID-19 has changed how we communicate with others, work, patronize our favorite restaurants and brands, and even invest.

For some Americans, the onset of the pandemic brought an ugly truth to light; if faced with a $1,000 emergency expense, would they be able to cover it? According to a January 2022 survey by Bankrate, only about 44% of respondents said they could cover an unexpected $1,000 expense using savings. Though this percentage has increased in recent years, it still speaks to the difficulties many people face when trying to save for their future.

In the first few months of the pandemic when the world seemingly shut down, there were fears as millions of people were laid off, furloughed, or faced uncertainty with their jobs. The initial sting of the lockdown and subsequent recovery also seemed to be enough to encourage folks to make wholesale changes to their saving strategies.

For others who were lucky enough to keep their jobs, they were suddenly flush with extra money, thanks to work from home benefits and a series of government stimulus checks. Some saved the additional money, paid down debt, or invested it.

As the economy and country continue adjusting to the changing world, we’re seeing what the landscape looks like for investing across the board. Here are a few things we’ve learned so far and what it means for the average American.

Short-Term Savings Are an Important Safety Net

We often hear that investing should be done with money you can afford to lose. It’s because investing is a long-term strategy meant to build wealth over time. If you pull money from your investments to cover other expenses, you won’t be able to take advantage of the benefits of long-term investing, including compounding returns.

Worse yet, you might lose money during a market downturn, like when the Dow Jones Industrial Average slipped from 29,398.08 on February 9, 2020, to 19,173.98 on March 15, 2020. This may seem like a harrowing situation, and that’s because it is, but there are some encouraging signs.

When the pandemic set in, personal saving rates spiked for a short while, rocketing from about 8% in the months leading up to the pandemic to more than 33% in April 2020. This is partly due to the shutdown, workers saving money by working from home, and general belt-tightening. Since hitting its peak, the personal saving rate has since fallen back down to pre-pandemic levels, hovering slightly below 8% at the end of 2021.

The lesson here is that having a safety net is a great idea because you never know what might happen. Sure, the chances of another worldwide pandemic gripping the nation in fear are somewhat small, but a minor accident, like tripping and requiring emergency medical care, is a bit more likely. Don’t be caught off guard by a surprise expense! More importantly, establish an emergency fund before you invest. Short-term needs can quickly derail long-term plans if you don’t have the right foundations in place.

Don’t Fear Short-Term Slip-Ups

Let’s go back to the Dow Jones Industrial (DJI) Average for a moment. When it was clear that COVID-19 was more than an isolated issue, the Dow plummeted. It felt eerily similar to the Great Recession from 2007-2009, when the stock market plummeted from record highs to levels not seen since the mid-1990s. However, by the end of 2013, the recovery was complete and markets were hitting new highs once again.

The difference between these two scenarios is the length of time. Although short-term volatility can instill a level of fear in us that says “take the money and run,” we’ve learned time and time again that staying invested is often the best move we can make. When the stock market started slumping in late 2019-early 2020, some people pulled out, but by the end of 2020, the DJI was back to setting records.

Short-term volatility is common, and sometimes it has a way of scaring people into prematurely offloading their investments to avoid taking a loss. What we’ve learned over the years is that discipline is an art. Think of it like this: in The Karate Kid, Mr. Miyagi didn’t train Daniel to throw some flashy kicks around and then bull-rush his opponent. Instead, Daniel learned that diligence, practice, and patience could help him understand his opponent’s actions and anticipate what might come next. He didn’t buckle at the first sign of adversity and came out on the other side better for it. As investors spend more time learning about the stock market, they begin developing a new level of patience and experience that makes it easier to weather the storm.

There was plenty of sell-off during the pandemic, but there were also opportunities for people to use their stimulus checks to invest. Those who jumped in when the market was struggling took advantage of the dip and set themselves up for potential short- and long-term returns. History is an excellent teacher, as there are very few times when investors have lost money during a 20-year investment term. If history is any sort of judge, investors who jumped in during the first few months of 2020 may have a similar experience.

Stick to the Fundamentals

Beanstox Chairman and Co-owner Kevin O’Leary often says investing comes down to three principles:

  • Keep it simple
  • Keep investing
  • Keep portfolios diversified

O’Leary’s investment strategy underlines a process called dollar-cost averaging, investing the same amount at regular intervals to take advantage of natural changes in the market. Over time, dollar-cost averaging may allow investors to experience better returns across their portfolios compared to lump-sum investing or simple savings.

“The market goes up and down; it’s volatile,” O’Leary says. “When you do dollar-cost averaging, meaning that you’re buying every week or every month, you invest at different prices. Sometimes they’re low, sometimes they’re high, but they average out over a long period of time. That’s why it works. But the point is you average your way in. Over a long period of time, the market has generated 6, 7, 8 percent estimated returns on an annual basis, and that’s what you’re trying to get.”

Unlike other forms of investing, like day trading, which encourages people to buy and sell stocks in what seems like less time than it takes to microwave a bag of popcorn, O’Leary’s principles are not a get-rich-quick answer. Instead, Beanstox wants to help you build wealth based on consistency.

Investing is Important, But It Comes With Balance

When we combine our financial health with mental, physical, and emotional health, we’re able to grow and thrive while keeping everything else in perspective.

Being financially healthy means you’re taking care of your cash, investing it wisely, and keeping in mind that sometimes you have to deal with the ups and downs of the market. It also can help you live within your means, not rack up piles of debt, and maintain a budget that makes sense for you and where you’re at in life.

Most importantly, being financially healthy means you’re able to splurge on occasion while keeping the bigger picture in mind. When you think of your finances in the same way you think about your body or mind, it’s a lot easier to understand what you need to do to maintain your equilibrium!

What Next?

The pandemic has taught us a lot about ourselves, and honestly, some of those truths are a little tough to swallow. With that in mind, the pandemic has also given us new opportunities to plan a little better for a brighter (financial) future.

Whether it’s starting or topping off your rainy-day fund, employing a new long-term growth strategy, or just taking the first step toward becoming an investor, there is no better time than the present. As we’ve learned by now, we can’t turn back time. Every second counts!

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