MARIANNA HUNT MILLENNIAL INVESTOR

Seeing your savings for a house deposit plummet in value by more than £1,000 is pretty stomach-jolting stuff. That’s what happened this month when my investments went from being about 20pc in profit to a loss of 2pc.

One particular investment trust, Henderson Smaller Companies, which had been up by 30pc, went down to a 28pc loss in just a few weeks. The diagnosis? A severe case of coronavirus.

As cities, factories and workforces have come under lockdown, economic output has stuttered – and the growth of many of the companies in which I invest along with it. The virus is not disappearing any time soon, so for those who have been considering investing for the first time or who, like me, are still new to the game, it feels like the worst possible time to be putting your savings into stock markets. But that’s where you’re wrong.

Although falling markets make investors jittery, those are the moments when you can buy most with your money. The price of investments is influenced by supply and demand, so when everyone else is scared and pulling their money out, you can buy in cheaply. For someone getting started, that’s good news.

Although I’ve been investing for around a year now, in an effort to reach the £40,000 I need for a house deposit in 10 years, the £4,850 I’ve put in so far is just a fraction of the total amount I plan to invest.

Of course, there’s always the argument that stock markets could fall further still. But research has shown that, by delaying and trying to time the market, you often miss out on potential returns. Someone investing regularly every month over the past 20 years would have made a lot more money than someone else who held off when stock markets fell, calculations by stockbroker Hargreaves Lansdown show.

For example, if you invested £10,000 in a tracker fund following the FTSE All Share – a broad view of the London stock market – two decades ago, adding in £100 every month after that, your £34,000 would now be worth £70,193. If you’d started with the same approach but decided not to invest in any month where the market dropped by more than 5pc from the previous month, you’d have paid in £2,600 less (£31,400) but made £6,105 less than in the first scenario (£64,088 in total).

What if you took my belief that falling stock markets present a good opportunity to buy and invested extra every time they dropped by 5pc or more? By investing an extra £100 (so £200 in total) on each of those months, you’d have put in £36,600 and have made £76,298 – £6,105 more than by taking the first approach. That’s what I’ve done.

So far I’ve been investing about £600 a month. I’ve also been putting away an extra bit of my salary each payday in case a moment like this emerged – so this month I invested an extra £300, putting £900 into one investment trust. I made that decision because investment trusts allow you to benefit from stock market discounts. They’re essentially funds, but are traded on the stock market. This means the price you buy in at varies depending on supply and demand of shares. When demand is low, you can buy in at a “discount”, where the price you pay is less than the value of the assets you’re getting.

These discounts have been increasing since the start of the coronavirus outbreak and the average trust moved from 3.8pc to 9.3pc from the end of December to the end of February.

Investment trusts specialising in Asia, where the virus originated, have become particularly cheap. The average discount for Asia investment trusts widened from 8.6pc to 18.1pc over the same period. Pandemic or no pandemic, I still believe Asia – and China in particular – will be one of the biggest drivers of growth in the future. Earlier this month, Deloitte, a consultancy, predicted that China’s economy would grow by more than 5pc this year, despite the coronavirus. That’s a small revision from original predictions of 6pc growth in 2020.

That’s why I put my £900 into a trust specialising in China. Although past performance is no guarantee of future success, over the past 10 years this trust has made investors almost 1.5 times their money. That’s far better than if you’d simply invested in Asia as a whole. I also managed to buy in at a bargain price. Between December and February, its discount quadrupled from 3pc to 12pc.

I can’t say the name of the trust, because of rules preventing journalists from writing about their investments within 30 days of buying or selling it. However, I can say that it looks after more than £300m and invests in technology giants such as Alibaba and Tencent. Both of these companies have capitalised on opportunities created by the coronavirus, such as expanding their video conferencing apps and allowing people to book virtual consultations with a doctor.

I’m lucky enough to have some spare cash, in addition to my rainy day fund, to buy in. Those that don’t have an emergency savings pot should make one before they even think about investing.

Coronavirus should not necessarily put you off investing, as supply and demand means there are discounts to be enjoyed

Did I make the right decision? Email marianna.hunt@telegraph.co.uk

Bargain trusts for when China recovers