How To Save Money During The Coronavirus Pandemic In 2020?
The coronavirus pandemic, the fall in oil and stock prices, the slowdown in the national economy and the depreciation of the dollar are all elements of a single crisis that the Americans are experiencing today. This makes everyone wonder how to save money during the coronavirus pandemic. There is a high probability that we are only at the beginning of the way, and all possible precautions, including in personal finances, will not be superfluous.
As Warren Buffett says, “when the tide gives way to low tide, you can immediately see who was swimming naked.” This rule is useful to remember in order to organize your finances in a truly reliable and efficient manner. Here are some simple tips to help you answer the question of how to save money during the coronavirus pandemic and make you feel much better in the next crisis that is inevitably coming.
When it comes to preserving capital, the investment object is exclusively financial instruments with a fixed interest rate. That is, such an instrument is selected that will provide the investor with a certain income with minimal risk of losing the initial investment.
Thus, to preserve money, it is probably worth to focus on such instruments as deposits and bonds. Other investment objects, for example, real estate, stocks, derivative securities do not meet the requirements of money conservation, because they do not provide for repayment or payment of the initial amount of the investment at a predetermined date.
We proceed directly to the consideration of financial instruments that will help preserve money.
The power of the cache
We are already used to various credit cards, Apple and Android Pay, other modern payment systems via smartphone. It seems that nothing can prevent it from continuing to use all this. True, some people already had experience, for example, calculating at the cash desk of a large store or in a foreign restaurant, when your card does not work, it will be easier to understand what it is about. In the era of coronavirus infection of a large number of people, which, of course, can be included in those who service our credit cards in various banks, such failures cannot be ruled out. That is why in these difficult times it is better to carry several cards of various banks with you, and it is even better to have a certain amount of cash in your pocket, which will allow you to overcome difficult situations with honor.
Margin of safety
Every family should have own financial cushion. It is believed that this stock should last for 6-12 months. The problem of everyday settlements smoothly leads us to the fact that it is necessary to build up cash reserves and houses that will allow us to live normally when banks fail, and some of them may even stop working for one reason or another. I think that such an amount should be some about monthly expenses of a family, and it is better to constantly maintain this supply within the given range. For those families where there are elderly parents and relatives, I would significantly increase this sum, bearing in mind the possible medical costs. And please do not be too lazy to optimize large bills, so that it is convenient to pay for the delivery of food or goods without change. This is in case of voluntary quarantine.
Problems with the national currency make the question once again topical in what is better to keep your financial cushion. We believe that it is better to diversify your stocks. As for your family savings in general, it is better guided by the cache. The specific proportions depend on your personal circumstances. This is not connected with the current crisis – just after the one of 2007-2008, the dollar lost a lot in value for not to remain a reliable option for saving, and so far nothing has changed much. Further devaluation only confirms this thesis.
Audit of expenses
Once we have secured uninterrupted financing of our current needs, we can go further and look at family income. Are they in danger? Can’t reduce your place in the company? Will your business survive the crisis or will you have to tighten your belts? how to save money during the coronavirus pandemic in a situation if something goes according to an unfavorable scenario. Count on the worst and, if necessary, adjust your plans and upcoming expenses. For example, it might be better to postpone the purchase of a new car, or you should not take a mortgage loan for the purchase a home. In general, a little caution and prudence will not hurt anyone.
Assets Portfolio Review
Now is the time to look at your assets. What do you have? How is your money invested? Is everything good there? The situation has changed, and it’s possible that something is already too tough for you. Let’s say you have invested $ 100,000 in a two-year structural product that is linked to the growth of shares in technology giants such as Apple, Facebook, or Alphabet. They sagged a lot, and you can lose a lot of money. It is worth contacting the investment company and once again saying everything – it might be better to leave this product ahead of schedule, if there is such an opportunity. It is worth worrying about those who have large investment portfolios abroad. Analysis of their current state and verification of “communication” with the manager will not hurt.
Make your Roadmap
It will not hurt to look at your long-term plans again. Do you need to change anything there? For example, in a year your son graduates from high school and for many years you saved up for his studies at a prestigious university. Money was invested in the US stock market, and portfolio valuation has already fallen by 25% this year. This is a sign of alarm. And if it gets worse? You need to sit down and take everything into account, make informed decisions together with your investment adviser, if any.
Do not rush to hypes
Do not give in to these difficult times to various “attractive” offers. You can often hear: “Crisis is new opportunity!” For whom? For a professional speculator? For new customers? For those who have never played these games and are not going to do it?
For an ordinary private investor, a crisis is usually almost a disaster. If this is your case, then it is better to carefully analyze your losses and look for a answer to question how to save money during the coronavirus pandemic . An honest and open conversation with yourself is the best thing you can do now. Remember that no one can predict the future and everyone relies on the old experience, but this time everything can be much worse. Only based on your personal circumstances and plans should you make responsible decisions yourself.
Deposits
A tool known to every American, the mechanism of which is quite simple. Having visited any bank, you need to sign an agreement and deposit money into the account. However, is everything so simple with this tool?
Advantages of deposit:
- The ability to draw up a deposit agreement offline at the office or online through online banking;
- A guarantee of the return of the investment amount up to a certain amount in commercial banks;
- An individual approach to determining interest rates for large amounts of investments.
Disadvantages:
- Withholding tax on personal income;
- Ability to fix rates only for a short time;
- The inability to close a term deposit without loss of interest.
Bonds
This tool is one of the main ways to attract capital in developed countries. Bonds are debt securities issued by the borrower as evidence of his obligations to the lender, that is, the investor. You can buy bonds by contacting a professional broker.
Benefits:
- In the case of government bonds, there is no levy on personal income tax;
- The ability to prematurely sell bonds without loss or with a slight loss of interest income;
- The ability to fix the interest rate for a long time.
Disadvantages:
- The bonds are mainly guaranteed by the issuer. In the case of corporate bonds, payments are guaranteed by a specific company;
- There is a risk of an increase in interest rates and a decrease in the market price of bonds, which may lead to losses in the event of early sale of bonds;
- Additional expenses for broker’s commission.
Every secret becomes apparent
Any crisis has one big plus, and many smart people use it. The fact is that the crisis perfectly illuminates all the mistakes that you made. This applies both to the choice of personal financial strategy, and in the tactics of its implementation. For example, during a coronavirus epidemic, the owner of a restaurant or travel agency will immediately realize that it was a mistake to focus only on this business and invest all their money there. And a private investor, looking at his portfolio of securities, without any explanation will guess the value of the advice that he received for so long from his investment adviser.
New and timely investments
Significant imbalances in the development of individual fields of the economy and activities give reason to think about the feasibility of entering new business projects. For example, projects in the agricultural industry may become relevant at the present time, because no one will cancel the demand for food. Despite the fact that prices for agricultural products are still somewhat lower, however, the fall will be significantly lower than other commodities, such as oil, metal, etc.
Delivery services for goods, including food, are also becoming relevant. Today there is a great opportunity to invest in an online service for delivering fresh food from farmers and craft manufacturers in large cities. The organization of search services for home staff under quarantine in schools and kindergartens as never before can also be demanded.
Watch carefully for changing demand, and you can find opportunities to start a new profitable business. Production related to the manufacture of hygiene products, such as toilet paper, napkins, respirators, etc., will be at the peak of loading. It is worth taking a closer look at the various investment proposals, from the position of the ongoing changes.
Some projects and companies that are likely to bring you closer to the answer on the question of how to save money during the coronavirus pandemic, whose shares are probably worth paying attention to in the current situation, you might have known before, but considered them not attractive enough for investment.
