Looking For Ways To Manage Your Finances Better During The Pandemic? Here Are A Few Tips

Given the current circumstances, the odds of a recession due to the coronavirus outbreak are rising every day. Recession as we know it, is often the result of an abrupt drop in spending, although certain triggers of a recession cannot be predicted in advance. A recession doesn¡¯t have to mean that all investments should be put on hold.

According to a report by The Balance, a recession can be the best possible time to begin investing because asset prices often fall hard. One can pick up stocks, bonds, mutual funds, real estate, private businesses just the way they would have done during a steady period. During a recession, different industries and types of companies and investments are often safer than others.

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According to The Economic Times report, the projections for world GDP 2021 have fallen below 2.5%. Yes, there has been loss of production across the board after businesses came to a screeching halt due to the pandemic. But all hope is not lost.

Here are some tips to think about when trying to grow your money during a pandemic:

1. Consistent approach

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According to Financial Times, for young investors, a consistent saving approach is the first key to an investment strategy. A global recession can be seen as an opportunity as there are chances of market values compounding three-fold. The report states that clear financial goals are all that matter; a habit of consistent saving and investing has the potential to drown the worst recession in the market. ¡°Markets have braced several recessions, and each time they have emerged stronger,¡± states the report. There have been 33 U.S. recessions since 1854, and investors who held onto stocks eventually survived the dip.

Also read: Did You Have To Take A Salary Cut Due To The Pandemic? Here Are Some Ways To Manage Your Money

2. Rainy day cash during a bear market

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A bear market is when a market experiences prolonged price declines. It typically describes a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment. Retrenchments, salary cuts or delays in payout are inevitable outcomes of a sputtering economy. Make sure you have three-to-six months¡¯ salary saved for a rainy day.

3. Rupee cost averaging

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Rupee cost averaging is an approach in which you invest a fixed amount of money at regular intervals. This, in turn, ensures that you buy more shares of an investment when prices are low and less when they are high. The concept of rupee cost averaging can be great when it comes to maximising your profits in the long run. But it depends on the stock¡¯s future value. If a stock continues to fall, there could a chance that the company is facing troubles. In such a case, it is unlikely to rise in the future. This means there¡¯s no point in lowering your average cost.

Also read: How To Manage Household Finances Better In The Middle Of A Pandemic

4. Continue your SIPs

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The stock markets are witnessing a huge sell-off as the coronavirus pandemic is expanding. According to a Financial Express report, mutual fund investors should continue their systematic investment plans (SIP) as they allow an investor to buy units on a given date each month. The biggest advantage of a SIP is that the investor does not have to actively track the market.

5. Consumer staples

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No matter what happens in the economy, people still need certain household items on a recurring basis. Toothpaste, soap, shampoo, laundry detergent, dish soap, toilet paper, and paper towels. Since these products are always in demand, they're considered consumer staples. Basic goods and services companies are the best bid to lay your stock investments in because no matter how well or poorly the economy works, they have higher chances to stay afloat.

Also read: 8 Ways The Indian Millennial Can Manage Money Better