Covid-19 has taught us we need to have an emergency fund
The ongoing Covid-19 pandemic has not just endangered millions of lives across the world, it has also dealt a mighty blow to the global economy to such an extent that a recession looks unavoidable. Tough times, like the one we currently find ourselves in, are great teachers too. They teach us many things, like the importance of financial preparedness to be able to take on any adverse eventuality effectively.
Money lessons the coronavirus crisis has taught us:
· Never take a loan you cannot afford to repay, never over-borrow, and be sure to have a contingency plan to be able to repay your loans in full on time.
· Always have in place an adequate emergency fund. No contingency plan is complete without an adequate emergency fund. It’s important in this time when many among us are losing our income as the economy comes to a grinding halt. You can do so by utilising your declining expenses during the lockdown and exercising strict cost-cutting measures and cutting down wasteful spends going ahead.
· Prepare your will and timely complete your nomination formalities. Do not delay preparing your will and always ensure you’ve completed the nomination formalities pertaining to all your insurance policies, investments, and retirement funds in time so that your legal heirs avoid unnecessary suffering in your absence.
· Diversify your investment portfolio to mitigate risks. The Covid-19 crisis has severely impacted most investment avenues. It’s important to align your investments to your risk appetite, financial goals and liquidity requirements strictly and not to go chasing unrealistic returns targets from your investments. Lastly, do not discontinue an essential investment without thinking it through because the longer you stay invested, the better your chances are to fetch desired returns.
When signs point to a potentially troubled economy, reign in spending and squirrel away money instead.
Contact one of our advisors for more information.
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