COVID-19 – Impact on Your Personal Finance

Dear Readers,

I hope you are safe and doing well. Indeed these are challenging times which are impacting each one of us via multi-facet manners by posing risks on both health and wealth.

In last one month, if health hazards were not enough, all avenues of making and preserving wealth are being impacted. It can make the sternest and objectively minded individual be wary of the future.

Let me put it this way, am I worried. Come on ! I am also a human. Starting from health, I feel for my loved ones, including you. It would be inhumane of me to say that I don’t feel worried of the impact on human lives of this risk. I won’t boast upon the heightened immune system of our “Indian” genes, but some say that this may be of help. I believe that social distancing and home quarantine has immense benefit and I am supporting the initiative.

Financially – well this is more objective and cause more immediate transparent concerns. My financial portfolio has suffered a reduction by ~25% and I am sure that this is not the end. Does it worry me –  well, depends upon how one looks at it. I see it this way :

1. My short & mid-term needs are not impacted. Any funds supporting such requirements are intact and healthy;
2. My long term needs are sufficiently ahead in the future and this phase too shall pass. By the time the long term goals will come, this correction shall look like a noise. And before it becomes a noise, I am trying my best to take advantage of this opportunity.

What am I doing at this moment ?

Professionally :

1. I am attending multiple calls / webinars a week to gather market info and trying to gather economic and health updates. This helps in identifying early threats and opportunities;
2. Attending as many client calls as I can. This is an important time where people would have concerns and having an objective call with your advisor helps to put things into perspective.

Personally :

1. Maintaining social distance, but being available digitally. You may not face any disruption when it comes to accessing your portfolio information or reaching out to us;
2. Investing regularly to take opportunity (once in a decade opportunity) of this market correction. If needed topping up my portfolio daily and increasing my monthly investment budgets till atleast dust settles. Last one I saw was in 2008-09 and hazy memories of 2000-01. I took valuable lessons back then and fully implementing them this time. Nothing lasts forever and this too shall pass.

A Few Do’s & Don’ts

If you can take a few things out of this note, then these are the ones which you may like to please focus on (other than the most important one of social distancing) :

1. Please continue to invest the way you are currently doing! After a few quarters when you will look back, you will remember this period where there a ‘fire sale’ was happening. You would not want to miss this opportunity. Slow and steady – no rush !
2. If you can, increase your allocation towards Equity assets. But you must not allocate any amount which you need in next 5 years. The base rule remains the same –Equities are for long term;
3. You must not stop your committed regular investment amounts. It is a flip of point 1, but so important that I must write it again. This is the time when you take multi-bagger opportunity of your regular investments;
4. You must not redeem your investments. I know it feels painful to see the red in the portfolio values. But by redeeming you convert something temporary to something permanent. Remember, what is showing as red now, is not for your current requirement, but many years from now. This is exactly what ‘long term’ meant.

We would wish you all a safe, healthy and indeed a wealthy end of this year 2020. Stay on course.

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