Vaccination is the name of the game when it comes to dealing with the COVID-19 pandemic. As more people take their first shots, there is a surge in the number of infections. A second wave is already playing out in Maharashtra, the wealthiest state in the country. The government agencies are grappling with the twin challenge of containing the virus’s spread and vaccinating the population. Multiple reports suggest that many cities are facing lockdowns and night curfews.
It is a year since governments imposed the first set of lockdowns across India. It was unchartered territory, and governments were figuring out ways to deal with the situation. That is not the case now. The second wave is currently confined to six states and primarily in Maharashtra, only. Yes, there would be implications for the economy. However, there is awareness about the steps to be taken to curb the spread. At the same time, India has already launched the world’s most extensive vaccination programme. All of that could mean a lot to your money.
Focus on saving more
Businesses are all set to go through an upheaval. While the economic activity went back to levels before the lockdown last year, there are changes in businesses’ day-to-day affairs. A lot of them have adapted to work-from-home by employees. Many small businesses are functioning without offices. Jobs are precious. If you are lucky to have a job, hang on to it.
Your focus this year has to continue to be on saving. The latest RBI Bulletin for March 2021 has an article on household finance. In the second quarter to September 2020, households have moved to spend more on discretionary items than just ‘essential spending’.
The contraction in private consumption has reduced as a result. However, the reality is that we are still in a phase where households would have to remain concerned.
It is amply clear that the Covid-19 pandemic will unwind slowly. In that context, your finances have to support you. Your spending has to be below your means no matter the pandemic situation.
Invest regularly
If you are regular with your investments, you need to continue to do so. Your systematic investment plans should not stop. If you are investing directly in the stock market, identity companies that are beneficiaries in the situation. This column explained the ‘vaccine portfolio’ in September 2020. We talked about sectors that could be potential beneficiaries of the lockdown or the pandemic. It may sound perverse, but the crisis throws up opportunities for a lot of businesses. Since then, hospital, pharmaceutical, education stocks have dramatically gained in value.
There was a lot of concern about the unorganised sector in India. While loan moratoriums helped small businesses last year, most companies would have to make difficult decisions this year. Unorganised sector businesses will have to make way for the organised sector to take over. That is clear from the commentary by the corporate management of large, listed companies in the paints, construction material and other sectors.
For example, the tiles sector’s sales were much higher than the overall demand from metros and cities, according to one research from ICICI Securities, a leading brokerage. That is even though the demand is hovering around 70-80 per cent of the pre-pandemic period. That is due to the structural problems faced by the unorganised sector. A similar trend was seen in other sectors too.
Active and passive investing
Most of you may not be aware of the nuances of sectors or ways to identify businesses that could do well going forward. You must continue investing through exchange-traded funds or mutual funds. The National Pension Scheme is a good starting point for many of you looking to create long-term wealth through your savings. You should not invest the money you need immediately in the stock market based on tips or rumours.
Please keep it in a fixed deposit or a liquid mutual fund. Gold prices have gone down 10-12 per cent over the past few weeks. If you do not have a financial advisor, you may want to get one sooner than later. Get your asset allocation right as you plan your financial future post pandemic.
(The author is editor-in-chief at www.moneyminute.in)