As the COVID-19 pandemic disrupts the global financial markets and life as we know it, it is perfectly natural to be concerned about your financial security, both short-term and long-term. While it is impossible to predict what lies ahead for the markets, the economy and our society, it is important not to panic. Now is not the time to make hasty, emotional decisions that could derail your chances of building financial security and wealth over the long term.
Here are five ways to keep your savings and investment plans on track:
1. Set and review your goals
We believe that a goal-based approach to saving remains relevant and we continue to recommend this strategy during turbulent times. This involves gaining a full understanding of your financial needs going forward and using these insights to articulate your savings and investment goals. These may include, among other objectives, saving for retirement, an emergency fund, your children’s education and your family’s dreams to explore once we’ve overcome the pandemic. Once you know what you are saving towards, you will know how to prioritise your resources and make spending decisions in line with your goals.
2. Get professional advice to help with your financial resilience plan
Sanlam’s financial planners are still available for consultations over the phone or via digital channels. Get in touch and set up an appointment to review your goals, and (if necessary) revise your plans and implement the changes. The structured processes that you follow when working with a professional in this field will help you to fully understand all the options available to you and make the best choices for yourself and your family.
A market shock like this impacts the money you have already saved and invested but should not affect the future savings you were going to make. As always, saving over a recurring period is a sound strategy for building financial security. This is good news for investors with long investment horizons, such as younger people saving for retirement.
For investors approaching retirement, now is the time to avoid locking in any investment losses. This may mean delaying retirement or finding other sources of income, so you do not have to dip into retirement savings. Speaking to a professional will help you to chart the best course forward.
3. Frugal spending habits
Given the amount of uncertainty surrounding the social and economic impacts of the COVID-19 pandemic, it is essential to be as self-disciplined as possible with your spending right now. Now is the time to carefully consider where your rands go and find ways to make them go further by adopting frugal spending habits, such as cutting out some luxuries and looking for good deals where possible.