Is Covid-19 a blessing in disguise for young people and their personal finance?

Abstract: The global pandemic of Covid-19 led to a crisis of not only fatal impact but financially. The stock market experienced one of its biggest market crashes ever and the young investors of our generation experienced something that they could never imagine. Their financial situation and investments suddenly changed and many of them did not know how to act or behave during this difficult period. This paper is based on qualitative research where ten different young investors have been interviewed to determine if they have matured and how their behavior has changed financially. The two research questions for the paper are: Is Covid-19 a blessing in disguise forcing young investors to mature, increasing their financial literacy, and thus change their investment behavior? and how has the Covid-19 pandemic affected young investors decision making on the stock market? The study and research questions were determined using three theories which are the efficient market hypothesis, behavioral finance, and the stages of change model. All three models were used to see how an individual behave during a financial crisis. The efficient market hypothesis basically argues that all relevant information matches the prices of stocks at any given time. Behavioral finance examines how an individual behave in a financial setting such as investment behaviors. Herding behavior and overconfidence are two cognitive biases within behavioral finance that was easily seen in the individuals for this study. The stages of change model states that an individual go through five different stages when a change of behavior is needed. This model could be applied on any individual, but a change of investments behavior should not go through so many stages as the model has so it had some limitations on the individuals in the study. The results and findings of the paper states that young investors have learned a valuable lesson from the Covid-19 pandemic increasing their financial literacy and creating more sustainable strategies for future investments.