How to Rescue Your Retirement from Covid-19 Impact Thursday, Jul 16, 2020
Imagine it's 2021.
The world now has the perfect treatment for Covid-19.
There's a proven vaccine to protect you from the virus.
The fear of dying from Covid-19 is history.
Now, that would be something, right?
Well, there's STILL one other thing that could SPOIL the party.
I am talking about your plan to make your retirement financially secure.
You see, health issues aside, Covid-19 has wrecked the financial plans of many, probably you too.
And if you dismiss this now, you could jeopardize your retirement plans irreversibly.
Imagine having to work for a few more years before your retire just to plug the hole in your plan. Imagine not being able to afford a medical emergency or the comforts that you were used to before retirement.
Well, it does not have to be this way.
The good news is there is a way to deal with this situation!
Here's our 5 point plan to deal with Covid-19's impact on your retirement plans...
#1 Cut back expenses, invest savings
Our recommendation is to trim your expenses wherever possible. This is especially true if you are facing a job loss or income cut. The lockdown is a boon as it enables us to easily cut back on shopping, eating out, travel and everyday commute. Use this time wisely to cut back on unnecessary expenses.
The more you save today, the more you can invest...and therefore the better your chances are of building a healthy retirement corpus.
#2 Realign your Goals, Add more Income Streams
Accept that your pre-Covid investment strategy may not serve you well post-Covid. This is especially relevant advice if your income has declined during the lockdown or if your investments are now fetching you a lower ROI.
Our recommendation is for you to first find ways to reinstate your income to the pre-Covid levels. You and even your spouse may want to consider adding new income channels by trying to monetize your skills and hobbies.
The more your income, the more you can invest. This will go a long way in helping you get back on track as far as your retirement plan is concerned.
#3 Renegotiate EMIs
Interest rates on most retail loans have fallen sharply over the last few months. This has made it possible to cut down on your EMI Payments.
So, call your bank and renegotiate your EMIs.
What do you do with the savings that materialize? Yes, direct them to your retirement plan.
#4 Reassess your portfolio, consider more allocation to Equities
Times like these are best to take a complete review of your asset allocation.
Check if it's in line with what you had planned. If not, now's the time to make corrections.
Within the various asset classes be sure you are in the right investment avenues.
For instance, for your liquid fund needs, be sure you have the right debt fund in your portfolio.
When it comes to equity, select the fund carefully...and ensure it suits your risk profile. Yes, aggressive equity funds rise fast...and they fall fast too. See what suits you best and be sure you are in those funds.
In short, use this opportunity make every Rupee count.
#5 Review your retirement goals
If you are someone who's in the early phase of their career, you can quickly recover from the Covid-19 setback. All you may need to do is just save more...or hope over time you can grow your income faster.
A mid-career or senior professional may however require a review of retirement goals itself.
Depending on how close you are to your retirement, you may need to scale back your retirement corpus goals.
If required, consider delaying your retirement by a few years in order to achieve your desired corpus.
This is the hard truth. But then it's better to be planned well than to get hit by a unpleasant surprise on the cusp of your retirement.
So these were our top 5 recommendations for you to deal with the impact of Covid-19 on your retirement plans.
Go ahead, put these to work. We are confident that by the end of the exercise, you will be far better planned.
Editor's Note: 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.
Disclaimer, Statutory Details & Risk Factors:
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.
Mutual fund investments are subject to market risks read all scheme related documents carefully.
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.