8 Financial Tips During COVID-19

1. Try to not keep looking at your pension and investment valuations and the stock market

It is easy to drive yourself crazy during these turbulent times for stock valuations by checking on them every day. This can be detrimental to your mental health. Stock markets are at this time very volatile and will continue during this crisis to have large valuation swings. Monday saw the FTSE 100 at one of its lowest points in over 8 years, but Tuesday saw the FTSE have its largest ever points gain and second largest percentage gain in one day ever. Markets will likely continue to be very volatile over the next 3 months as uncertainty over the virus and how companies will be affected both now and, in the aftermath, continue to unfold.

2. If you can afford to stop taking withdrawals or income from your pension/investment, then do so

With nearly all funds not in cash feeling the effect of the virus it is important not to compound the loss by taking out funds you don’t need. Taking the same money from your fund now is using up a larger percentage than it was before and therefore will mean the fund will not recover as quickly. Take this example; Paul was taking £5,000 (5%) per annum out of his £100,000 fund when it dropped by 20% to £80,000. Paul would have had £95,000 before the fall in the markets and £75,000 after the fall, if his £75,000 recovers the full 20% due to full market recovery then his fund will be worth £90,000. This has meant by taking out £5,000 during the fall in the market it would have cost Paul £10,000 even once the market has recovered. Obviously some people are reliant on taking monthly income from pensions and investment but it you have built up surplus cash reserves and the income/withdrawals form these are not necessary then you should look to stop them until it is needed or the market recovers.

3. As per our previous article it is important not to move your investments into cash as this time 

The main stock indices have fallen by as much as 30% in the last 2 months and although this is not an easy time to keep your faith in stock markets, days like Tuesday show why you have to keep money invested. On Monday if you had gone to cash you may have been 29% down but if you stayed invested by close of play on Tuesday your losses would have been 20%. In volatile times people can not predict when these large increases and falls will happen, so it is important to remain invested.

4. This is a good time to invest new monies

As per the above point, markets have been down as much as 30% and some shares have reduced in price even though they are making more revenue than ever before. It is impossible to time the bottom of the market but what we do know is that now and the next few months will be a buying opportunity for good medium to long term growth due to the sharp fall in shar price.. The market will continue to be volatile over the next few months, but we have some strategies to help minimise the effect of this on new funds being invested. To use another Warren Buffett quote, “Widespread fear is your friend as an investor because it serves up bargain purchases”

5. Use the reliefs out there, now is not the time to be proud!

The government has released unprecedented measures for the economy. One of the main expenditures a lot of people have is their mortgage and the government has agreed with mortgage lenders that you can take up to a 3 month repayment holiday if COVID-19 has put you in financial difficulty and this will not impact your credit score. The government has also called on landlords to accept payment plans from tenants struggling to pay rent and the eviction notice period has been extended form 2 months to 3 months. Payment holidays agreed with credit card companies will also be recorded in a way that does not impact your credit score. The government has announced support to employers to keep their employees in a job, employees can be designated as “furloughed workers” if they cannot do their work due to the impact of COVID-19 and this support will be the lower of 80% of normal pay or £2,500. This should mean your employer is able to keep you in a job and give you at least 80% of your wage or £2,500 per month gross. Support for the self employed is also due out today. For the self-employed there will be further guidance today from the chancellor but in the meantime Self-Assessment payment on account can be deferred from 31/07/2020 to 31/01/2021 and you can access Universal Credit if you are not able to work. Turn2Us here have useful information on this.

6. Try to limit the amount of news you take in and make sure the news you do take in comes from reputable sources

It can be easy to engross yourself in news at the moment, whether that is through television, internet or social media but this can have a detrimental effect on your mental health. Try to limit the amount of news on COVID-19 you take in per day. It may be an idea to only watch the morning and evening news and ban yourself from looking at any news websites or other media throughout the UK. Please make sure you choose good quality information such as reputable news outlets for the news you take in, rumour and speculation can lead to anxiety and therefore lead to health issues. Mental Health UK has some further tips here.

7. Avoid scams

Fraudsters are using the COVID-19 outbreak to try and scam people out of money. There has been a marked increase in the number of financial scams since financial uncertainty has taken place, these include calls pretending to be from your bank or mortgage provider. If something seems to good to be true, then it probably is and don’t be rushed into making decisions. You need to be careful when opening emails and do not send any private information via email that you have not sent before. A lot of emails can disguise their address to look like they have come from your bank or lender. The TV licence gives some good examples of how fraudster disguise their email here and National Trading Standards also has the following advice here.

8. Be safe and healthy

Please follow the COVID-19 guidelines as issued by the government to make sure you and your family remain safe. The health and safety of all is paramount at this time, financial markets will recover but it is up to everyone to follow guidelines to make sure that the people you care about are kept safe during this time. Remember:

  • Stay at home
  • Only go outside for food, health reasons or work (where this absolutely cannot be done from home)
  • Stay 2 metres (6ft) away from other people
  • Wash your hands as soon as you get home
  • You can spread the virus even if you don’t have symptoms.

If you have any questions or queries for us, please do not hesitate to phone or e-mail as we continue to work through this time as per government guidelines.

For more information or advice please contact Willis Wealth Management on 028 9032 9042

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Willis Insurance and Risk Management, Willis Wealth Management and Accident Investigation Services are trading names of Willis & Company (Insurance Brokers) Ltd, which is authorised and regulated by the Financial Conduct Authority - 309124. Registration No. NI 32004. Registered in Northern Ireland.

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