By: Ejay Viloria #ejayfa
President, E&R Insurance Agency, Inc.
As a financial advisor, I was being asked by clients and friends how to manage their existing investments and funds during a crisis like the coronavirus pandemic. My answers to them can be summed up in these five points. May it guide you and help you achieve some peace of mind while we are all at home in quarantine:
1. DON'T PANIC
The worst enemy of a crisis is panic. You don't have to withdraw all your money from the bank and keep it with you at home. It’s a riskier move considering the possibility of being robbed. If you don't need the money yet, don't pull out your investments. Withdrawing now will leave you at a loss considering the stock market has gone to bear territory. Remember, investments have a standard cycle composed of peaks and troughs. So, stay cool. If your invested funds are for your retirement, get it when you retire - not when there is a crisis.
2. HAVE AN EMERGENCY FUND
in a crisis, cash is king. I cannot emphasize enough the importance of having savings equal to at least three months of your monthly income. Having this ensures that you have the financial resources to last you through the crisis, hopefully. Unfortunately, a big number of our fellow Filipinos have been forced into a 'no work, no pay' situation and they cannot blame their employers since some businesses really need to close down. Having an emergency fund is a safety net for a short-term crisis like this. If you don’t have much savings, then it’s a good time to start something today. I always ask my clients what will change in their lives if they just spend 90% of their income. Not much, right? So start saving by setting aside at least 10% of your earnings, no matter how small it is.
3. CHECK YOUR LIFE AND HEALTH INSURANCE COVERAGE
Reality check: sickness and untimely death can wipe out your life savings and future income. Having adequate life insurance gives you the assurance that you and your family will be taken care of financially, in the future. Sure, you may feel like you don't need insurance especially when you are living a healthy lifestyle. Unfortunately, illnesses and accidents choose no one. Perhaps an even worse situation is you can't get insurance when you already need it, when you’re older and sicklier. It's much better to be safe than sorry. Set aside the "Bahala na si Batman" attitude. There is no better time to get a life and health insurance plan that today.
4. IN ANY CRISIS, THERE IS AN OPPORTUNITY
Yes, all investment classes are going down now, but if you have extra funds that you can invest, now is a good time to buy. Investment experts have said time and time again, “buy low, sell high”. Crises presents investors an opportunity to buy because stock prices are low. So just like any ‘Sale’ season, go and invest now. Put your money in equities and bonds. The Philippine Stock Exchange is open during this Enhanced Community Quarantine period.
5. HELP THE LESS FORTUNATE
If you are blessed with extra resources, share them with those who need help during this difficult time. There are a lot of organizations asking for donations. Decide to contribute to at least one. The little that you give away will go a long way for others.
While not money related, let this be my final word: SPEND QUALITY TIME WITH YOUR FAMILY. Yes, we work hard because of them but our fast-paced lifestyle has resulted to sacrificing family time often. Take this opportunity to truly, really be with them.