The pandemic effect: How Asset Investments Widened the Wealth Gap?

The COVID-19 pandemic has had a significant effect on the world economy, causing numerous layoffs and company closures. While many people have experienced financial hardship, others have prospered. In actuality, over that time, the wealth gap has worsened, with the affluent increasing richer and the poor getting poorer. In this piece we’ll be discussing various factors that have led to widening of the wealth distribution gap after the onset of global COVID pandemic.

The main reason for widening of the gap was hat during COVID times, the wealthy have been investing in assets whereas the underprivileged experienced financial difficulties and even struggled to even make ends meet.

For example when the pandemic struck, the stock market fell sharply, this made many investors fearful. The affluent, however, viewed this as a chance to scoop up equities at a discount. They had the means to survive the pandemic and profit from the slump in the economy. As a result of this, markets swiftly bounced back and hit record highs, doubling the wealth of early investors.

Additionally, another favored monetary investment during the pandemic time has been real estate. With borrowing costs at record lows, many rich people have seized the chance to purchase real estate. Due to this, the housing market has boomed, driving up the cost of homes and driving up consumer interest in the real estate market.

The wealthy have also made investments in non-traditional assets like cryptocurrency and fine art. During pandemic times, the value of cryptocurrencies has risen dramatically. For example, Bitcoin gave a return of 87%, 307% and 62% in 2020, 2021 and 2022 respectively. Similar to this, the demand for art has increased, with some works fetching prices in the tens of millions of dollars.

Meanwhile, the pandemic has notably impacted the poor. Many people have lost their employment, and the earnings of those who remain employed have plummeted. They had to put paying for essentials like food and rent ahead of investing, which left them with little to no savings. They were left behind as they lack the resources to invest in assets while the affluent have benefited from the falling economies.  

In conclusion, it is evident that the elites were able to survive the storm and even come out ahead, despite the fact that everyone has been impacted by the COVID-19 pandemic in some or other way. They have continued building up money and compound the wealth gap by purchasing assets including stocks, real estate, and alternative ventures.