We’re in Lockdown 3.0 as the government of India has extended the lockdown for another two weeks so that we stay at home during the coronavirus pandemic. However, there’re some states that have provided some relaxations to resume work.
The coronavirus pandemic has already sent shockwaves through the global economy affecting the finances of people around the globe.
In my last blog, I had discussed some of the ways to live through the recession period and prepare yourself for the future
We’re facing some challenging times and it becomes our responsibility to take care financial well being along with our physical and mental health.
As the whole world is worrying about the amount of deaths caused due to coronavirus pandemic, the investors are worrying about their losses in their financial portfolios. The investors are right because as it is their hard earned money.
But will worrying so much really help? What may help them is to think rationally and be cautious while dealing with the stress of COVID-19 crisis.
Here are some tips you can use to maintain investment hygiene to manage your personal finance effectively.
1. Sanitise your portfolio
With the coronavirus pandemic affecting the economy worldwide, there is a definite need to diversify your investments. You need to conduct thorough diagnoses to understand what may be wrong with the investments, and see if you’re well-diversified. You need to take a closer look at your portfolio and include a mix of debt and liquid funds if not done already. You may also need to look at some of the funds like debt funds and if they have a large corpus invested in AA then you may need to switch between other funds like liquid funds or invest in bank fixed deposits.
2. Maintain distancing from your investments
Its true to keep a close watch on the markets to sanitize the portfolio but that doesn’t mean you watch your portfolio every second. This may not go well with you mentally as well especially if you invested a lot of your money in equities. Remember the golden rule of investment in equities – long term perspective. If you’ve invested with a long term goal in mind then you need not worry as during the past too the equity markets have bounced back. If you try to liquidate your portfolio now then it might create more problems for you and your long term goal might be in danger.
3. Increase your emotional immunity
According to Benjamin Graham, British-born American economist, professor and investor, “The Investor’s chief problem – even his worst enemy – is likely to be himself”. Indeed it is true. When the markets falling like it is now during the coronavirus pandemic, emotions run high. You’re bound to fear in the wake of crisis and you tend to overreact but any action arising out of fear may damage your portfolio. To prevent this overreaction to happen, it is advisable to have adequate knowledge about investments. There’re many great leaders in finance who’re conducting webinars to generate awareness so you should attend to those webinars to make yourself aware on how to stay calm during these tough times.
4. Don’t store unnecessarily
I can see people stocking a lot of grocery items in a fear that they won’t get it later. However, I would strictly recommend to not hoard any items unnecessarily and buy only those items that you need on daily basis to avoid going out to the market. The government is making all attempts to bring the essential supplies, and there’re many stores that are even supplying them at your doorstep. Therefore, there is no need to hoard goods in anticipation of the price rise.
5. Invest in a health insurance
And, finally, this is extremely important to take a health insurance for you and your family if you haven’t done it already. A lot of health insurance plans now even cover COVID-19 disease as well. Also, you can easily purchase a health insurance while staying at your home without any hassles.
To prevent you from being affected with COVID-19 disease, it is appropriate to stay at home and follow certain personal hygiene.
Similarly, it is also recommended to maintain investment hygiene to protect you from a financial damage. The only thing that matters right now is to be safe and healthy, and also have enough cash in hand.
Therefore, these are some of the tips that you should follow to manage your finances. Do you have anything to add to this list? Do post in the comments below.