"What a blind person needs is not a teacher but another self,” Helen Keller, the famous American author who inspired a generation with her triumph over disability, once said. An unprecedented situation exists. We are locked down at home, many of us are working from home, and then there are those courageous warriors on the front line of the Covid-19 epidemic.
Doctors, nurses, attendants, administrative officials and government servants across the country are trying to protect most of us from the onslaught of a global pandemic.
At present, we are all blind. We have no vision of things that lie ahead of us. But Keller’s inspirational quote should show us the way.Whether you choose or not, a new ‘you’ is on the way. To move forward, you need to accept that there would be a new ‘you’ sooner than later. That newness is all set to influence your finances too. Your money behaviour is likely to change for good.Once you realise that, you may want to apply that to your financial life.
Market cycles are real
The sharp slump in share prices over the past one month has rattled many. Values of shares you thought were all-weather businesses fell by 15-30 per cent.
Mutual funds that collectively invest your money into assets witnessed an erosion of the net asset values of equity schemes across the board. In the past month, benchmark indices have wiped out gains made over the past three years.
If you have been an investor for ten years, you are still in the money. But those who started investing three years back are back to where they were.
Those who started investing now are probably worried after losing 25-30 per cent of the investment value since January 2020.A fundamental lesson starts here. Stock markets move in cycles and are real, and there are no permanent highs or lows.
Savings over spendings
The money in your hand is worth a lot today. You are probably spending far less than needed. You are no longer splurging on your wants but only concentrating on your needs. It may be a great time to step back and evaluate your desires. For years, you wondered about creating a monthly surplus. Financial advisors have often suggested creating an emergency fund.
The three months to June 30, 2020, are your chance to create that. Try to save more than just needed. You could rein in the urge of going big on your wants. By no means, the column suggests a stop to spending. But, a new you would start to differentiate between a want and a need.An ability to spend wisely is another good thing that emerges out of the crisis.
Disciplined investor
A primary thing talked about when investing is the need for a disciplined approach. A lot of you did not make any changes to your systematic investment plans in February when things started to look tough. Mutual funds are sending out notes to investors, suggesting increasing their investments when there is a weakness in the financial markets.
They speak with experience. Mutual fund houses have moved through market cycles. You need to understand that staying invested at this time matters for
the long-term prospects of your investments. A disciplined approach to investing allows you to ensure that you are giving your money the time needed to grow.
A well-read you
A lot of you have time on your hands. For generations, Indian households have been conservative in their approach to investing. Most of you have owned physical assets like property and gold. The time you spend at home now is a blessing for your money. Besides your ability to save more, you are most likely to come out knowledgeable from the crisis.
The importance of financial assets in your portfolio needs to be understood. You may want to read up about the movement in financial markets, reasons behind that, the action the government has taken and things that businesses are likely to do over the next few months. A curious mind would want to connect the dots. The moment you do that, the crisis could turn into an opportunity like never before.
Seize the opportunity
Currently, you are not splurging your money on unwanted things. For years, you have wondered about creating a monthly surplus. Financial advisors have often suggested creating an emergency fund. The three months to June 30, 2020, are your chance to create that.
(The writer is editor-in-chief at www.moneyminute.in)