How to Grow your Wealth during a Pandemic Wednesday, Aug 05, 2020
Never before has the world been shut away on this scale.
The world is facing humanity's biggest crisis since World War II. Its effects have touched almost every country.
But does this mean your life should be put on hold?
We stopped using public transport. We stopped going to work and stopped meeting our family and friends.
The new normal has changed the way we live, certainly.
But should a pandemic alter our identities or our goals?
Pandemics are temporary. And almost all of us are going to outlive it.
So why put your wealth creation goals on hold?
Many of us may have done this.
We say to ourselves, let this situation blow over, let things get back to normal. I'll then get into the right frame of mind to invest.
There's nothing wrong with that...
However, we also know that the best time to invest is when others are not.
Remember Buffett?We simply attempt to be fearful when others are greedy and
to be greedy only when others are fearful.
In our view, a pandemic is a good time to build wealth.
For those of you who are still generating income, it's very likely that your savings have increased during this time.
After all, expenses have fallen...EMIs are lower due to lower interest rates.
The impact of COVID-19 has also lowered valuations. Investors and Fund houses are able to buy high-quality stocks at a lower value compared to their true value.
The government has on its part, announced impressive fiscal packages and plans to revive businesses.
In short, during a pandemic there are various options to grow your investments...
It's difficult to predict when this pandemic will be over. And when it is, it will be a missed opportunity!
So, what do you do with all these excess savings?
One learning from this pandemic is the importance of having a contingency fund.
Create a contingency fund by keeping aside savings in a bank account or low-risk liquid fund.
A contingency fund of twenty four months of personal expenses can protect you from such unforeseen situations.
Beginners to this concept of a contingency fund can start with saving one to two months of expenses at a time.
During a pandemic, revisit your financial goals.
Take care of your immediate needs. But focus on building a portfolio that can protect you in any situation.
Lots of things have changed during this period. The Covid-19 pandemic for instance has disrupted normal economic activity and life...possibly for quite some time.
It's possible that your previous portfolio of investments may not serve you well in future.
Rebalance your portfolio if needed.
Also, like we said, you possibly have surplus savings that can be deployed in these times. Make wise investment decisions keeping in mind your planned asset allocation and the opportunities available.
Be sure to gauge your appetite for risk before rebalancing your asset allocation.
And finally, this may seem like a no-brainer. But during the outbreak of a pandemic, staying in good health is essential to growing your wealth. Follow government directives and take precautions when you step out.
Stay Safe. Happy Investing.
At Quantum Mutual Fund, we believe, having the right asset allocation is as important to your overall financial well-being as perhaps picking the right fund. If after going through our note above you still feel the need to talk to someone, you can write to us at [email protected]. We will be happy to assist you.
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The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.
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Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.