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The pandemic of coronavirus continues to wreak havoc across all sectors across the world.
The 2020-21 financial year began amidst a lockdown with many of us now working from home.
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Still, the question that remains on everyone's mind is simply this: How safe is my job?
One of the sectors most affected by the coronavirus pandemic is civil aviation, where many employees have already been fired or sent on leave without pay. Several other sectors have already taken, or are contemplating, similar measures.
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Ways to Financially Prepare for Coronavirus
1. First things first. You need to have a substantial emergency fund to get you through a temporary financial crisis. Don't rule out the possibility of losing your job.
Furthermore, if you become ill and lose your job, you will be in real need of money. If you don't have three to six months of expenses saved, then it's time to act now and build your emergency fund.
2. maintain more liquidity: One change you need to make due to the coronavirus crisis is to have more cash on hand. For example, if there is a medical crisis during a weekend, having cash on hand would be helpful. And liquid emergency money should be accessible to your spouse as well.
3. Prepare a list of assets that you can liquidate if necessary, even if they are sold at a loss or at lower prices. Your assets usually include additional property, gold, equity and the like. You need to have a plan for accessing lines of credit if your salary is affected by the outbreak. Also, it is advisable not to take loans against your assets.
4. How do you reduce expenses? You can start by simply making a list of all your non-essential expenses and ranking them in order of importance, and then cut back on items that are less important for a few months.
5. Most importantly, you need to reevaluate your goals. Start by checking whether you actually invested as much as you planned last year. The goal should be to save and invest at least 30% of your net salary. The correction in the markets means that you would have fallen behind in your goals. But these are also good opportunities. You can save and invest at a rapid pace, or postpone your goals for a couple of years.
Read More: Economic crisis and unemployment are causes for the increase in Brazilian entrepreneurs
For those who have taken a pay cut or lost a job during the coronavirus pandemic, investing more may be difficult in the short term. Alternatives may have to be considered. For example, if your child plans to go to university abroad and you were planning to finance the entire cost, you can now ask him or her to look for scholarships or take out a loan.
6. Now let's discuss how to invest in stocks in current market conditions. Due to the stock market correction, your risk appetite may have decreased and therefore the allocation to equities would have been below your pre-established level. But it is very crucial to stay in line with your original asset allocation. How is this achieved?
Keeping your SIPs running, but any incremental funds you have should be directed towards actions. When the market recovers, large highs will lead the recovery.
Trim your mid- and small-cap exposure and move more money into active large-cap or index funds during the coronavirus pandemic.
