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The mental toll of the covid crisis

Lex Hall  |  11 Jul 2020Text size  Decrease  Increase  |  
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In the days leading up to the coronavirus lockdown of 23 March, we feared, among other things, the effect it would have on people’s mental health. One hundred or so days later, the results are, as you might have expected, rather grim.

Almost half of all Australians say their mental wellbeing is worse off since the crisis began and their worry about money has increased, according to new research from Fidelity International. One in five (22.4 per cent) say they worry daily and one in four (26.5 per cent) weekly. Almost one in three (29.4 per cent) of those currently employed are worried about job security, far more than the pre-pandemic level of less than one in five (18 per cent). This skyrockets to 45.4 per cent among those in casual employment. 

And despite all those people talking about saving money during lockdown, more than half of those surveyed (55.4 per cent) say they could only last three months or less if they were suddenly made unemployed, including 16.9 per cent who would not be covered at all.

What sort of effect is this having? Well, people are tightening their belts, for one. The Fidelity survey found most people vow to curb their discretionary spending—eating out less, spending less on essential items such as food and clothing—rather than offload assets such as shares or property. When you consider that consumer spending accounts for up to 60 per cent of GDP, hopes of a consumer-led recovery look tenuous at best. And consider too the likelihood of interest rates remaining low.

“Unfortunately, we now face an environment where the concept of risk-free return is an historic concept,” says Fidelity’s cross-asset specialist Anthony Doyle.

“Increasingly, Australian investors will be required to take more risk to achieve their investment goals, meaning higher yielding asset classes like Australian and global equities are likely to see growing inflows in the years to come.”

woman looks as person wearing snorkel to prevent infection

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Why the long face?: When you consider that consumer spending accounts for up to 60 per cent of GDP, hopes of a consumer-led recovery look tenuous at best. 

With that thought in mind, Graham Hand this week lays bare his experience of investing in Afterpay—yes, I know, many of you, as Hand suggests, will be sick of hearing about the rise of the buy-now, pay-later provider. But Hand’s confessional is especially revealing. The click-baity title, Hand-crafted to suit the subject matter, should whet your appetite: 11 lessons from my lousy $50k profit on Afterpay. Read it now so you don’t regret it later.

Elsewhere this week, we profile Lazard’s Global Infrastructure Fund, and examine the reasons that prompted Morningstar analyst Edward Huynh to upgrade it to Gold.

Morningstar portfolio strategist Amy C. Arnott shows why this year's turbulent market offers yet another reminder of the power of portfolio rebalancing for risk reduction.

Coronavirus has pummelled India’s economy, but population growth is one of several reasons for optimism, argues Anthony Fensom.

Glenn Freeman taps Nikko Asset Management's Peter Monson for some Asian stocks picks and uncovers names spanning financial exchanges, computer game makers and condiments suppliers.

This week marked 12 years since the death of John Templeton, considered to be the greatest investor of the 20th century. Morningstar’s Larissa Fernand looks back at the man, his life, and his legendary business acumen and how it can help you.

And finally, Peter Warnes unfurls his Forecast for 2020-21. It’s an essential read, outlining what’s to come and how investors should prepare. Here’s a taste: “Remain with quality in both equities and bonds. Ensure investments are liquid. Shun unlisted vehicles. Do not leverage portfolios. No margin lending under any circumstances. There is no such thing as a free lunch or a risk-free investment.”


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is senior editor for Morningstar Australia

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