In times of coronavirus: Everything you need to know about your investments

Imagine the chaos: global stock markets have rocked, industries are closing, and countries are announcing closings due to COVID-19. In less than a month, the Indians find themselves in the midst of a global storm that has turned the lives of every citizen upside down. Certain sectors, such as aviation, are already cutting wages and we will not know the extent of job losses until a later date. During these periods, the management of money and supplies becomes the focus of all families. But what works for one person may not work for another. Some money management tips for four categories of people:

With an emergency fund and adequate investments: You will survive this financially. For someone with three to six months of emergency funds, well invested and without a lot of loans, it’s time to calm down. Nishant Agarwal, Managing Partner and Head – Family Office, ASK Wealth Advisors says, “Things will be relatively more comfortable for these people. Despite the historic fall of the stock market, this investor should not worry too much. Even the temptation to switch from one fund to another can be maintained until things become clearer. Chances are there will be another fix if the news flow gets worse. But then things can also improve. No action is the best action at present.

If you are someone who has not invested enough in stocks and who is sitting on cash right now, this is the time to invest. Agarwal adds: “Thank you for your chance that such an opportunity has arisen. You can start by buying large cap stocks via index / exchange traded funds / mutual funds or portfolio management services. You can invest between 5% and 8% of this money. And slowly and steadily increase your full allowance. Even if you have money in stocks, you can still increase exposure over the next three months. Nitin Rao, CEO of InCred Wealth Management, says: “We prefer actively managed funds, portfolio management services and high quality stocks for equity allocation. Conservative investors can look at index funds or index ETFs. Even debt investors can invest in AAA-rated corporate bond funds to maximize their returns. An asset allocation review is also recommended. “

No emergency funds, with investments: Perhaps the most critical thing today is an emergency fund. But how should you create this? The options are: switch stocks or equity mutual funds to liquid overdrafts or repay bank deposits. Raghvendra Nath, CEO of Ladderup Wealth Management, says, “Since these people don’t have emergency funds and stocks are languishing, you shouldn’t sell them.” If you have money in fixed deposits and other debt funds, try using them to create an emergency fund. Even gold would be a good idea as it goes up. You can borrow against physical gold or sell if you have it as an exchange traded fund. And of course, if you have unused money in accounts, now would be a good time to consolidate bank accounts. Barve, founder of MB Wealth Solutions, says: “Because of the job skip, many people have multiple bank accounts, and sometimes there is also unused money in those accounts. You’d be surprised to know that if you log into these two spouses accounts, you might even have enough to cover a few months of expenses. “However, these accounts must be active and not dormant. To reactivate a dormant account, you will have to go to the agency.

Freelancers: Unlike those who have a job, if you’re a freelancer or consultant, things are going to be difficult for you. With the work that should dry up in the concert economy, you need to take action as soon as possible. Tarun Birani, founder and CEO of TBNG Capital Advisors, says: “These clients should maintain high cash levels. Currently, we are asking them to maintain six months of spending due to the uncertainty. If necessary, they can make investments in a low risk to high risk hierarchy. Birani says, “Ideally, a loan should be completely avoided. In the worst case, you will need to perform a cost-benefit analysis in which you have an equity investment, but no cash on hand. In a scenario like this, taking an overdraft or short term loan can work instead of selling stocks. “

It is also urgent to reduce all unnecessary spending for at least a few months, even after the lockout is complete and things are back to normal. Rao adds: “For the self-employed, the work cycle should follow the economic cycle.”

Having investments and NDEs: If you have investments and a mortgage or other equivalent monthly installments (EMI), this can be difficult, especially if your salary is delayed / reduced or there is a job loss. Nath says, “This is a difficult time. Partially liquidate your investments and prepay loans to reduce the burden of NDEs. But if we can support NDEs, then we should continue with loans and investments together. Over the next two years, the probability that the return on your investment will exceed the mortgage interest rate is very high. There is also another option. Rao says, “Look for EMI leave for a few months or take an overdraft for fixed deposits or securities that could be used temporarily.”

In short, it is time to learn some difficult lessons for those who have not paid attention to their money. But it is never too late to start learning.

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