Smart Ways to Invest Your Money during this crisis

0
613

Apart from facing difficulties of this COVID-19 crisis, we should also think of managing the money which plays a key role in today’s scenario. We should think of smart ways for investment decisions, as Albert Einstein once said – for every difficulty, lies opportunity. Investment decisions need to be guided by asset allocation, which can be based on investment appetite and objectives.

The COVID-19 pandemic is one major challenge faced by every sector especially the financial sector. The impact of the pandemic will be large – having lower incomes, shutdowns in production departments, fall in demand, etc. No one predicted the huge spread of COVID-19. A lot of employees are already under pressure because of pay-cuts and layoffs, a major example can be the closure of Uber offices. We also need to be clear with regard to managing household expenses.

Rahul Jain, head of Edelweiss Wealth Management, suggested certain tips to handle money during this crisis. Individuals need to respond to wealth generation and capital preservation which are important aspects of wealth management. Thus, investment decisions should be guided by the allocation of assets which is based on risk appetite and investment horizon and objectives.

Below are some of the money matters that one needs to attend during these times.

1. Make sure that the portfolio is well assigned according to the objectives of risk and returns.

2. Make sure that the portfolio comprises of financial instruments like mutual funds, bonds,  deposits, etc.

3. Maintain a contingency fund that can be equivalent to 6 months of daily expenses, to tide over job losses and pay cuts.

4. Be sure that the family is having comprehensive health insurance and are covered against unforeseen medical expenses.

5. Try to invest in life insurance and keep in contact with your wealth advisor for proper consultation.

A rule of thumb is to cover the equivalent of 15x the annual income. And those depending upon short term funds, they should consider the portfolio consisting of high-quality debt instruments like non-convertible debentures and fixed deposits, etc.

One can easily control the investing behavior during this uncertain period by identifying the opportunities and by taking necessary steps and guidance. In these situations, don’t assume the financing options you previously had will continue to be available. Undertake scenario planning to better understand how much cash you’ll need and for how long. Use this opportunity to actively engage with your financing partners to ensure your available lines of credit remain available, and to explore new or additional options should you require them.