With all of the uncertainty surrounding COVID-19 from a health perspective, the one certainty is it has forced individuals, companies and government entities around the world to change. Some of these changes may only be temporary, but it’s not out of the question that we are witnessing the beginning of a new economic era. Government intervention has been higher than normal already, companies are scrambling to find ways to protect their financial assets and investors don’t know what investment strategies to implement. Change is coming and these are some of the areas that could be the most impactful in the new economic era.
Big Government May Have More Control
When big government has more control, it means the government will control economic infrastructures, like banks, utilities, telecommunications and transportation. They will also direct development and research expenditure and direct capital investment. This type of control isn’t new for some countries, but it could become a new reality for other countries for the foreseeable future.
Potential Tax Raises
Wealthier people may have to pay more taxes to help the global economy recover. Expect governments to get creative with how they implement new tax laws, whether it’s with capital gains, income tax, property tax, wealth tax and more. The potential for higher tax rates can impact investment strategies since the severity of the changes may not be immediately known.
Decreased Reliance On Globalization
Globalization is always evolving and the evolution should continue even more in the aftermath of the COVID-19 pandemic. Some countries have begun questioning whether they need to rely on other countries when it comes to the supply chain. One of the biggest changes we could see globally is countries relying more on onshoring. This is especially true in specific sectors like healthcare, pharmaceuticals and technology. Globalization will always be a part of worldwide operations, but the decreased reliance on it going forward could change supply chains for years to come.
Implications On Investment Opportunities
As an investor, what should you be thinking about when it comes to your financial assets and investment opportunities in light of the COVID-19 pandemic? Assets like cash and bonds won’t do very well in the near-term, so if your investment strategies rely heavily on them, it may be time to reassess. Going forward, investing in sectors that may not be subject to as much government intervention could be a strategy to consider. Many financial experts suggest keeping financial plans intact for now, as the economic situation is very fluid. However, it’s always important to identify investment opportunities and potential strategies to prepare for the unexpected as much as possible.
Stock Investing Info keeps up with the global economy so you don’t have to as much as an investor. We strive to bring even a small amount of peace to your mind during these times of great uncertainty. A new economic era is likely upon us, so contact us today to discuss how the new era may impact your financial situation now and in the future.