As South Africa emerges from Level 4 Lockdown, we are only just beginning to understand the full economic impact that the COVID-19 pandemic has had on the country. Many people have already lost their jobs and many have been earning a reduced income during this period.
During this crisis the economy is very volatile and the global economy is experiencing a major global recession. This means that the price of shares on the stock market is likely to fall and this may impact on your investments.
So what does this all mean for your investment and saving strategy?
- Don’t panic: Don’t let panic motivate your investment decisions. The most important thing to remember is that investing and growing your wealth is a long-term strategy. You didn’t earn your money overnight; you had to work hard for it and your investments are just the same. So don’t panic and if you want to make changes to your investments you should consult a financial planner.
- Stick to your plan: If you have invested your savings into medium and long-term products it is important to stick to your plan. These kinds of products are designed to grow your money over a long-period, often they are best when left untouched for 40 years. Don’t be tempted to withdraw your funds. You will lose a lot more money than if you leave your investments and give them time to recover after the recession has passed.
- Preserve your assets: if you want to make decent returns on your long-term investments then it is vitally important to preserve your assets during difficult times like these. COVID-19 might seem disastrous at the moment but the market will recover in time and you want to benefit from inflation-beating investments by taking advantage of a longer-term investment strategy.
- Contact a financial planner: if you are very worried about your investments then get in touch with a certified financial planner. They can give you advice on how best to protect your investments during this period and they may offer advice on new investment opportunities that the pandemic has presented.
- Consider diversifying your portfolio: the saying “ don’t put all your eggs in one basket” is true when it comes to investing. Ideally you want to have a ‘diverse portfolio’ which means your money gets invested in different areas. This means less risk and more opportunity for growth. Take a look at the different kinds of investments available and consult a financial planner for advice on the best option for you.
- Avoid scams: scammers often take advantage of financial uncertainty, offering investment opportunities that promise high returns but require quick investment decisions. Be careful, any offer that seems too good to be true, probably is. Consult with a financial planner and read more about identify potential scams here.
- A good time for first time investors: if you are new to the job market and are still earning a salary and are able to consider investing, now is a good time to start investing. Assets are cheap at the moment and although it might not seem like it, most financial planners believe that the economy will recover and you are likely to see good returns in the long-term. If you do want to start investing, consult a financial planner for the bet advice under the current conditions.