What started as a virus in a small city in China turned into a full blown global pandemic. Such was/is the terrifying impact of Covid 19 that half the world is in lockdown and the other half is cautiously watching the progress. This is disruption of a mammoth proportion that will have an everlasting impact on our lives.
Consider Yourself are lucky if you are working from home. This means you have the safety of a home and the security of work. The future seems unknown as of now but we have no choice but to be upbeat about it. I am too scared to use the word positive 😦
The lockdown has turned our life a full circle and got us back to basics. The most important thing it should have taught you is the importance of saving, especially the younger generation who were splurging on clothes, food, parties etc. if you have not saved enough to last you at least six months then you are in trouble. Having a contingency or emergency fund is of utmost importance, if you did not have it up until now, then this is an actionable item for you post the lockdown.
Secondly, having the appropriate asset allocation, if you are over weight towards illiquid investments, then this situation should have taught you the importance of having a balance of liquid and illiquid assets and also the need for diversification. This is especially for people who believe a lot in real estate, Fixed Deposits, Gold etc.
Thirdly, loans, if you have opted for the EMI moratorium for your home loan, then clearly you are living beyond your means. The moratorium option is not cheap, it will set you back by a few years. But the most important lesson here is to evaluate your loan taking and repayment capacity. Further people have been availing the loan facility for buying other goods like mobile phone, white goods, holidays etc. This according to me is totally avoidable, however if you must, then the EMI for all your loans together should not be more than 40% of your salary. If it is more then the current situation would have taught you the necessary lesson.
This lockdown is a test of our patience and discipline and there’s no scope for failure. Patience to see thru the lockdown period safely or shall I say sanely by keep ourselves engaged meaningfully. Displaying discipline by following all the safety and health guidelines outlined by the experts. If only we would follow this practice even with our investment portfolio, we would stand to gain hugely.
Lastly, the lockdown is forcing us to review our resources like food, groceries, medicines and even drinks on a regular basis to ensure that we don’t run out of stock. The same approach needs to be applied for our investment portfolio as well. A well-stocked and well balanced portfolio that is reviewed on a regular basis.
Having said all this, the biggest lesson according to me is to feel gratitude that we are not among the thousands of people who are homeless and probably even jobless. A silent prayer for all of them.