A man Bored during quarantine at the computer. Pandemic epidemic

Bored In Lockdown!, Why Not Organise Your Finances?

After we have re-decorated our houses, spruced up the garden and exhausted our streaming options on Netflix & Amazon Prime. Now is the perfect time to look at our personal finances? It may mean looking out paperwork and going online to update passwords, but it will keep you busy for the next couple of hours.

As a Financial Advisor, the finance sector has managed to cope very well in lockdown, most companies have remained open, with many people working from home and servicing clients. For me in terms of work, nothing much has changed. However, the epidemic has made me look at my own financial situation.

  • Here are some areas, I have been looking at:
  • Check your Insurance policies – are you covered, are you getting a good deal?

Do you have enough cover?

Personally, the Coronavirus Pandemic has caused me to re-look at my personal insurance policies, to double check what exactly am I covered for? The pandemic really puts into context what is important and has made me really contemplate my own mortality. Also, I wanted to check that I was still getting value for money for the coverage I hold and the price I am paying.

  • Review your investments (Bank Accounts, Investment Portfolios & Pension pots).
  • Are your returns beating inflation in your area?
  • Can you save more?

The Coronavirus outbreak has had a dramatic impact on people’s personal finances and investments. Stock markets have fallen considerably which impacts people’s pension & investment portfolio valuations. Although falls in financial markets are only a loss on paper if not crystallised, for the savy investor, market volatility is seen as an opportunity. In recent weeks we have witnessed more stabilisation in financial markets, as investors begin to look at life outside of lockdown. Financial markets tend to be more forward thinking than their underpinning economies.

There will be undoubtedly be an impact to property markets around the globe during lockdown, however you would expect a return to activity once restrictions are eased. In times of economic downturn, estate agents rely on the 3 D’s (Death, Divorce & Debt) to stir up activity.

And finally, there has been a direct impact to bank deposit rates too. In wake of the crisis, central banks rushed to cut interest rates to shore up their economies. While this is good news for borrowers, it is bad news for savers.

What can you do about it?

  • Increase diversification and utilise different asset classes, most notably fixed income products to secure return in a challenging environment.
  • Financial markets are offering buy in opportunities, so now could be a good time to invest, if you currently do not have equity market exposure.
  • If you hold pension and investment exposure, the advice is to ride out volatility, check your holdings diversification range, check fees and look at moving providers to cut costs.
  • If you hold cash, check your real rate of return against inflation rate in your area. It may be that by simply holding cash, your earning rate is less than the rate of inflation, which essentially means your purchasing power is less. (You are losing money)
  • If you are relying on bank deposit interest rates to fund your income stream, again look to more attractive fixed income investments that return higher than bank deposit accounts.

The lockdown if nothing else will provide us with real evidence on what we spend our money on. Many of us…me included, have realised that we probably do spend too much on entertainment, going to restaurants and bars and overspending on clothes etc. We have learnt that we do enjoy having home cook meals and with a little more organisation, will be easy to maintain when lockdown is over. Don’t get me wrong, I am looking forward to getting back to normal, but I think I will be socialising but spending less to do so. This will help me save more going forward.

If you would like help to navigate any of the above, please contact leeann@astutefma.com for your free finance check-up.

Have a great day,

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