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Summary
- The significant economic impact of the recent COVID-19 pandemic will continue to affect people in the times to come.
- One of the key lessons COVID-19 taught us was not to be careless and to be prepared for every circumstance. Do save up, build an emergency fund and an investment portfolio.
- Be patient and seek help if required on matters regarding financial planning and investments.
The recent vaccination drives in the UK, the US and other parts of the world have rekindled the hopes of the global residents to return to the much anticipated normal. In the weeks to come, we can expect the commencement of COVID-19 vaccination drives in Europe and the Asia-Pacific, bringing in some semblance of normalcy.
But will our lives get back to the normal that we saw a year ago? We may already be getting accustomed to the new normal now, but we will have to plan for such unprecedented events in the future.
The year 2020 has had its fair share of undulations across the asset classes, establishing the significance of low-risk, safe investments such as gold and precious metals. While the COVID-19 pandemic has claimed hundreds of thousands of lives and there is still a long way to move past the pandemic era, we do need to be prepared for such events in the future.
Here are some of our financial learnings from the pandemic that we would like to share with our esteemed audience.
Save and Invest
Millions of people lost their jobs during the pandemic with the imposition of lockdown restrictions and reduced industrial activities. As per the US-based public policy thinktank, Congressional Research Service, the unemployment in the world’s largest economy surged to 14.7% in April, an unprecedented level in the recorded history. It declined, upon relaxation of measures, to 6.7% in November, which is still high.
Job security is now a well-known concept among the working population, and in order to stay afloat in such crises, saving and investing would bolster our ability to face such headwinds.
Diversify your investment to manage risks
The pandemic led to substantial undulations across all major investment streams. The market’s increased volatility wiped off years of earnings, slumping of deposit rates, and the commodity prices surprised the retail investors. While most investments declined, assets including gold soared to record levels continue to trade over $2,500 an ounce level.
The need of the hour is to be proactive toward your investments and diversify your investments.
Do not take financial loans you cannot repay
The reduced economic activity and the surging unemployment rates during the pandemic did impact the financial loans. Instead of stressing out on paying for your new expensive recliner which you hardly use, saving up and avoiding such expenses would be the way to go.
So, go easy on yourself, cut down on your credit card bills and buy what is necessary.
Emergency Fund
The next takeaway is to build an adequate emergency fund for you and your family. The thumb rule is to put aside a certain percentage of your earning (5, 15 or 20% depending on the number of members) for the next one year and use it as your emergency fund for your family.
Bill Management
We suggest to our audience, irrespective of their age, to prioritise their bills and overall expenses and build a budget if possible. This habit would allow you to overutilise your expense budget and manage your savings effectively.
Ask for help if required
While the equity and commodity markets continued to recover, a massive rush of new investors was seen. While there is a difference between a seasoned and intelligent investor, we recommend seeking help if unaware of financial planning and investments.
