COVID Crisis, Investor Tips, Guidelines, Loan , Stocks , Mutual funds
May 10, 2020 , Kapil Jain

What should Smart Investors do tide over this COVID crisis ? (Stocks/ MF/ Banks/Home Loans)

What should investors be thinking in the current crisis 

Here are some of my thoughts on this…  

These are Winds of Change .. Some people will build walls while others build windmills. You cannot change the direction of the wind. But you can adjust your sails. So stay alert , stay calm, stay focused and improve your decision making skills.

Investments :

FD/ Debt

  • If you have huge FD’s in only one bank – it is advisable to move shift to 2-3 banks large banks Private / Large PSU bank like – SBI.
  • If you have fd’s in Co operative banks – it is advisable to shift/diversify your FD funds due to recent bank collapse crisis like PMC bank / CKP Bank etc.
  • Do not give your ATM pins/ password / Credit / Debit card numbers on phone to anyone.
  • In debt mutual funds avoid Credit Risk funds – If you have debt oriented credit risk funds – shift to Liquid / high quality funds which are ideal to park funds tax efficiently in this scenario

Stock Markets / Equity MF :

It is better to bet on your patience than timing the market.

  • In stocks / In equity MF – Don’t panic.
  • Stay Calm – Take a look at portfolio and rebalance as per asset allocation funds – Don’t dump your holdings / investments at the wrong juncture only to regret later.
  • Avoid lumpsum investments – Use STP (Systematic transfer)
  • Continue your investments – You are getting more units in your MF / Stocks at 20-30% discount due to this crisis. These discounts do not happen when the going is good.
  • Review and make necessary changes and again observe in 2-3 months. Equity are long term investments and fluctuation is a characteristic of the market. It evens out handsomely in the long run. Think in terms of probability. These are the times to exit out of underperforming companies and move to solid / fundamentally strong companies available at discounts.
  • DO NOT trade in the stock markets. Do not chase penny stocks. Do not chase quick returns. If it were so easy to trade and make money – world’s best brains would have been trading … BUT they are not….. and it says something…
  • Avoid FNO / margin / derivatives / leverage / Hybrid products / ULIP / Moneyback / Endowment insurance products etc. – Its time to clean up your act.
  • IN case you have salary cuts then reduce your monthly investments proportionately.

Emergency Funds / Lumpsum funds

  • Keep Emergency funds in liquid funds – 6 to 12 months of monthly expenses. These funds can be kept in savings account or liquid funds.

LOAN / Prepay? During this Covid crisis

  • Considering the ongoing crisis – At this point in time for next 3-6 months, it makes sense to have liquid cash – IF your loan amount is reasonable like 25-40L – DO NOT PREPAY the loan NOW. WAIT for the COVID crisis to get over AND THEN PREPAY do the necessary.

RESKILL/ UTILIZE TIME

  • If you are working from home and have time on your hands – this is the best time to skill / reskill yourself – Use the power of internet to upgrade yourself – there is no dearth of some really good stuff for knowledge
  • DO not Binge on every web series on Amazon/ Hotstar/Netflix etc. It is a never ending timewasting exercise… To some extent entertainment is ok – Remember – u will be able to turn this crisis into an opportunity for yourself if you judiciously utilize this time to upgrade your knowledge & think / do and act DIFFERENTLY from the crowd.
  • Remember these are Winds of Change .. Some people will build walls while others build windmills. You cannot change the direction of the wind. But you can adjust your sails. So stay alert , stay calm, stay focused and improve your decision making skills.
  • Take care and stay safe.

Some important action items which every Investor should do (compiled )

  • Prepare a statement of all your bank accounts FDs nominee details maturity date etc.
  • If your spouse or family member has no clue about your investments time to educate them.Also identify location of critical keys such as locker cupboard etc as well as location of your medical reports and vice versa
  • Prepare a list of immovable assets that you have and ensure that all papers pertaing to a property are together in one file.If online Encumbrance Certificate is working apply for that and keep it
  • Share your key passwords
  • Bank,IT website, investment accounts with your near and dear or write it out in a notebook and specify to near and dear to look into it( I know its bad in terms of secrecy but if you cant trust your own family who else are left?)
  • Share your phone email laptop ,ipad ,computer  passwords with family.If it is finger print or eyeball based convert to a number.If you have an apple account user id and pasword is critical
  • Talk gently to elders in the house and ask them to do all of the above for their transactions and help them if required
  • Talk to kids on how the economy can change and how cutting unnecessary costs is critical in future.Its their world and we may not  be there to support
  • Keep all your ID documents in one place and if you have a scanner time to digitize and keep it in a file

*Tough times do not last. Tough people do…. This too shall pass away*

Hope that is helpful .. Thx Kapil

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