Bank Better, Live Better

money-management tips during Covid-19

The effect of the current global pandemic is highly uncertain. It looms very large and can have you very worried, especially when you think about your finances. We asked personal finance bloggers Nicolette Mashile and Maya Fisher-French about investing during the time of Covid-19.

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It’s ok if you’re feeling overwhelmed at the moment, whether you’re stressing about the contents of your grocery cupboard or your long-term investments. In fairness, the long-term investments will be harder to replenish than your pantry. To calm our nerves we decided to find out how 2 personal finance bloggers are planning to weather the difficult economic outlook.

Managing financial stress levels

Financial journalist Maya Fisher-French says she’s managing her anxiety about her savings by simply not opening her statements. “If you’re investing for the long term, now is not the time to panic or make changes. The upside is that if you are contributing monthly to an investment, such as your retirement fund, you are getting better value for your money and this will actually help your investment returns over the longer term,” she says. “So don’t touch your face or your investments!”

Nicolette Mashile, who blogs as the Financial Fitness Bunny, says it’s important to stick to your financial goals despite the current economic uncertainties. “If you know where you are going this shouldn’t sway you. Stick to the plan that you and your financial adviser have created. Stay in contact with your adviser and ask for tips and any changes that need to be made,” she says. “Stay off broker or trading platforms and avoid constantly checking up on your investments.” 

Investing during a recession

What does a recession mean for investors? “A recession is a decline in growth or depressed economic activity,” says Nicolette. “Most asset prices will drop. Stocks, bonds, real estate, and retirement savings accounts are all assets. If you have cash, you can therefore take advantage of these low prices, but it takes courage to invest when the economy is down.”

If a country is in a recession, it means that returns from your investments are likely to be low until the economy starts to recover. “A well-diversified balance fund that has both government bonds and offshore investments will be better protected,” Maya says. To be considered a well-diversified fund it has to invest investors’ money in a range of assets to earn the highest returns for the least risk. This is often a mix of stocks, real estate, commodities (goods and services) and cash.

“Review your budget, especially if you’re worried about your income in the future. This is not the time to take on debt. Work on that emergency fund. Start thinking about side hustles where you could earn a bit of extra money,” Maya suggests. “Check what cover you have in place if you are worried about losing your job. Remember, credit life insurance will cover your debts if you lose your job or your employer does not pay you.”

Diversify and have an emergency fund

The two most important things to do right now, says Maya, is to have an emergency fund and as little debt as possible. “If your income is not affected by the lockdown, use the fact that you are spending less to boost your emergency fund and pay off debt.”

She adds that diversification is always important. “Never have all your money invested in one asset class or one country.”

Also invest if you are willing to go the distance, says Nicolette. “It will take some time for the market to rise again. Don’t invest money you will need in the short term and don’t take on risk you cannot stomach.”

Say no to debt holidays

Although a debt holiday might seem like a good idea, Maya warns against it. “Don’t rush out and take debt payment holidays unless you really cannot meet those repayments,” she says. “The outstanding amount will continue to earn interest and you will only be extending the term and cost of your loan.”

Be safe, bank from home

Although we all have to do our part and stay at home during lockdown, it doesn’t mean you can’t do your banking. Use the Capitec app to pay people and accounts, buy airtime or electricity, email bank statements and manage debit orders.

Disclaimer: This article does not replace financial advice. Please speak to your financial adviser to get advice suited to your personal situation.

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