Welcome to Your Money and Covid-19, a series about how to safeguard and future-proof your finances in an uncertain time.
Along with millions of others around the world, you are probably grappling with the uncertainty and fear as a result of the Covid-19 crisis. Besides worrying about your health and that of your loved ones, you might also be wondering about how this unprecedented situation would affect your financial situation, if not immediately, then in the long term. It is also likely that you already know of people who have had to take pay cuts or lost their jobs because of the crisis.
Reading the news about stock markets crashing around the world is likely to add to that anxiety. But let me reassure you that it is not all doom and gloom: This crisis presents a real opportunity for you to start investing in equities and diversifying your financial portfolio.
Why? Because of this simple principle: Buy low, sell high.
And the time to buy low is now.
The last time equities were so cheap was during the subprime crisis over 10 years ago. At the time, I was just starting out in my career as a financial consultant and did not have the surplus cash to invest. After over 13 years in the industry – and having amassed a healthy emergency fund – I now have spare cash to invest in equities. If I invest wisely, there is even a chance that I could fast-track my retirement when the markets eventually recover. I do not have a crystal ball to predict exactly when this will happen, but it will. History tells us that much.
But why not buy gold, you ask? Many consider gold to be a safe instrument in these trying times – and a number have already been sold off their stocks to buy gold – but I do not believe this to be a wise strategy. In early March, gold prices were at their highest levels since 2013. This goes against the basic investment principle of buying low and selling high. If you follow the crowd and start buying gold now, you would be hard-pressed to see an improvement in your financial situation. Though we are living in stressful times, remember: it is always best to remove emotions from the equation when it comes to investment matters.
A caveat: You should only be investing if and only if you have surplus cash over and above what you have stashed away for emergencies. Resist the urge to tap into your emergency reserves to invest and only invest if you feel that your job is relatively secure. If you are a freelancer or working in the gig economy, you should also err on the side of caution. If it is possible, continue adding to your emergency reserves.
If you are ready to start investing your surplus cash, and wondering where and how to start, let’s grab coffee. Drop me a line at ten.huiyu@finexis.com.sg.
About me: I am a financial consultant from an independently owned financial advisory firm with over 13 years of experience in the financial services industry. I am a Million Dollar Round Table qualifier for the years 2016, 2017, 2018, 2019 and 2020. I have an interest in helping groups of people that are currently underserved by financial consultants, particularly LGBT+ individuals and those working in creative industries.
Disclaimer: The viewpoints expressed are my own and do not necessarily reflect the opinions, viewpoints and official policies of finexis advisory Pte Ltd.
