Covid-19 and GBP coins

Four financial lessons we have learnt in this pandemic


As the pandemic enters its second year, what have we learned?

The World Health Organisation declared Covid-19 a pandemic on 11 March 2020, coincidentally the day that Chancellor Rishi Sunak presented his first Budget. At the time, the Chancellor announced a £12bn stimulus to counter the impact of the pandemic. By November, the Office of Budget Responsibility was estimating the cost had already reached £280bn at that stage.

The last year has been a traumatic one in which much has changed, perhaps never to revert to the old ‘normal’, however, maybe it might also have provided some useful financial lessons:

Make sure you have an up-to-date will

Early on in first lockdown the importance of having an up-to-date will (or, in some cases, any will) was highlighted to many people just as it became difficult to arrange one. The importance of a will means you can pass on your assets to the people you want to receive them. Without a will there is a prescribed process which means your estate may not go to those people who you want to benefit.

Relying on a state safety net is dangerous

The pandemic saw the number of Universal Credit (UC) claimants more than double to 5.8 million in the year to November 2020. The lowly level of benefits – even after a £1,000 temporary uplift – was a shock for many of those new claimants, including people who fell between the gaps in the job support schemes. Martin Lewis, founder of, recommends setting up an emergency fund to the value of "at least six months' worth of bills".

Keep an adequate cash reserve but be aware

In a world of near zero interest rates, you may be reluctant to leave cash on deposit, earning next to nothing. Cash itself is not risk-free. Although the capital value may be secure, it is easy to overlook the impact of inflation which reduces the purchasing power of each pound. Investing in cash may lead to long-term financial disappointment as savings rates tend to be lower than inflation, meaning prices rise faster than the value of your savings  However, as outlined earlier cash gives you valuable flexibility and time to react to changed circumstances.

Stay Calm - Time in, not Timing!

The UK’s FTSE 100 hit its low for 2020 on 23 March, the day that the Prime Minister launched the first lockdown. It was a dark time, but any investor who got nervous at that point, when the FTSE 100 was below 5,000, would have chosen the worst time to pull out. By the end of 2020, the index was 29.4% above its March nadir.

No one can predict the peaks and troughs of financial markets and it is extraordinarily difficult to time when the best days are.

Our Guide To Investing outlines that missing just the ten best days over the last 5 years would have cut your annual return substantially. Timing the stock market is extremely difficult, the best policy is usually to stay fully invested over the long term according to your objectives and time horizon.

At Armstrong Watson, our quest is to help our clients achieve prosperity, a secure future and peace of mind, we work with you to help build sound financial plans with regular ongoing reviews so you can remain on track. We can do this remotely via video as well as face to face with the necessary social distancing precautions in place

For independent financial advice you can trust, get in touch with one our team on 0808 144 5575 or email

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