What Does the Delta Variant Mean for Your Investments?
As the COVD-19 pandemic continues into its next phase, it’s natural to be a little nervous. But now is not the time for panic or knee-jerk reactions. Here’s why.
With the Delta variant of COVID running rampant, how does another looming wave of COVID impact your portfolio? What do potential mask mandates, a rise in cases and slowing vaccination rates mean for the market and the economy?
Let’s review what we already know.
The Delta Variant
With the rise of the Delta variant, infection rates are significantly up. Just months ago infection rates were on a downward trend, but all across the country we’re seeing the rate of COVID cases rise exponentially. While this variant, and others, are rising, we’re also seeing vaccination rates slow. According to the CDC, the U.S is just over 50% fully vaccinated. Experts, like the Cleveland Clinic, believe that we’d need vaccination rates of 70% to 85% of the total population to reach the herd immunity threshold.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
We’ve been fighting COVID for a long time. The country as a whole is experiencing pandemic fatigue, and we’d like to get back to “normal.” There’s a simmering sense of unease and frustration, with many companies and government entities mandating vaccinations or masking. Some companies are finding it difficult to find ample employees – and some employees are finding it difficult to find safe employment. Overall, we’re seeing higher rates of hospitalizations across the country as well.
With all of this negative news, should we be scared?
Don’t Panic
While infection rates are increasing, death rates are not increasing at the same speed per the CDC. This is due to vaccinations, and those who are vaccinated are less likely to be hospitalized than the unvaccinated. The current unemployment rate, while not at pre-pandemic levels, is at 5.4% as of July, which is historically not too shabby. With unemployment decreasing, we’re also seeing corporate earnings go up, particularly in industries that were hit hard by the pandemic.
Overall, GDP growth is continuing in recovery, with the first estimate of Q2 2021 GDP growth at 6.5%. Since this is not the first wave of the pandemic, things going forward may seem a bit less scary and frightening, and the future feels a bit more certain – even if we’re dealing with COVID. There’s a portion of the country that is feeling less afraid of contracting COVID. Stock markets have continued to hit record highs, even throughout the pandemic.
How Delta May Impact the Markets
There’s no need to panic when it comes to the markets and the Delta variant. We’ve been through this before, and we’ll get through it again. While the markets hate uncertainty, we can take solace in the fact that we’ve already lived through this before. On the whole, we came through the other waves with a strong economy. Yes, we had a recession for the first time in a decade, but we made it through and to the other side.
Investments are meant to be for the long term. Growing your wealth takes time, consistency and a level head. Changing your portfolio based on a quick dip in the market – or even an extended downturn – is a recipe for your own disaster. Those who were hurt most in the markets due to the pandemic were those who were short-term investors or emotional investors – neither of which is a great long-term strategy for growing wealth.
How You Can Prepare for Another Wave
Don’t let another wave of COVID rattle you. Prepare yourself for whatever may come – both in your investments and in your personal life. There will be growth opportunities for those willing to take them, and there will be winners and losers in the market. If additional waves and variants of COVID continue to wreak havoc on our country, we have to prepare for the industries that might get hit. Airlines and travel could see declines again. We may see spikes in e-commerce as these industries continue to dominate the economy.
The bottom line, is that it is important to stay diversified in your portfolio. Focus on your long-term growth, and overcome unwise investor behavior by skipping out on the daily market news that can trap you in the here-and-now thinking, instead of the future-forward thinking that you need to grow your wealth.
There are undervalued areas within the global markets that we’ll continue to see flourish. While this won’t come without expected bumps in the road, you’ll need to be proactively managing your portfolio to find opportunities. Analyzing data can be complicated and tiresome, and it pays in dividends to have a trusted financial planner handling this for you. Financial planners help you stay calm when markets are tumultuous, so that you can focus on your long-term goals.
Stay the Course
It seems as though COVID is here to stay, at least for the time being. It’s better to be prepared and ready to tackle what lies ahead, rather than bury your head in the sand and miss the opportunities heading your way. Any highs or lows in the market are temporary blips in the long-term management of your investments, so stay the course and keep your eyes to the future.
-
Nasdaq Sinks 418 Points as Tech Chills: Stock Market TodayInvestors, traders and speculators are growing cooler to the AI revolution as winter approaches.
-
23 Last-Minute Gifts That Still Arrive Before ChristmasScrambling to cross those last few names off your list? Here are 23 last-minute gifts that you can still get in time for Christmas.
-
The Rule of Compounding: Why Time Is an Investor's Best FriendDescribed as both a "miracle" and a "wonder," compound interest is simply a function of time.
-
If You're a U.S. Retiree Living in Portugal, Your Tax Plan Needs a Post-NHR Strategy ASAPWhen your 10-year Non-Habitual Resident tax break ends, you could see your tax rate soar. Take steps to plan for this change well before the NHR window closes.
-
Your Year-End Tax and Estate Planning Review Just Got UrgentChanging tax rules and falling interest rates mean financial planning is more important than ever as 2025 ends. There's still time to make these five key moves.
-
What Makes This Business So Successful? We Find Out From the Founder's KidsThe children of Morgan Clayton share how their father's wisdom, life experience and caring nature have turned their family business into a respected powerhouse.
-
Past Performance Is Not Indicative of Your Financial Adviser's ExpertiseMany people find a financial adviser by searching online or asking for referrals from friends or family. This can actually end up costing you big-time.
-
I'm a Financial Planner: If You're Not Doing Roth Conversions, You Need to Read ThisRoth conversions and other Roth strategies can be complex, but don't dismiss these tax planning tools outright. They could really work for you and your heirs.
-
Could Traditional Retirement Expectations Be Killing Us? A Retirement Psychologist Makes the CaseA retirement psychologist makes the case: A fulfilling retirement begins with a blueprint for living, rather than simply the accumulation of a large nest egg.
-
I'm a Financial Adviser: This Is How You Can Adapt to Social Security UncertaintyRather than letting the unknowns make you anxious, focus on building a flexible income strategy that can adapt to possible future Social Security changes.
-
I'm a Financial Planner for Millionaires: Here's How to Give Your Kids Cash Gifts Without Triggering IRS PaperworkMost people can gift large sums without paying tax or filing a return, especially by structuring gifts across two tax years or splitting gifts with a spouse.
