Four ways to change your investment behaviour amid COVID-19
- February 9, 2022
- Keep focusing on long term investment goals
- Keep investing regularly through KIC
- Curtail expenses and enhance your contingency fund
The COVID-19 pandemic continues to intensify. Amid this uncertainty, even as the value of your investments fall every day, do not panic but alter your investment approach to suit the times. Here’s how –
Keep a close eye
This does not actually mean you should stay fixated over the falling value of your portfolio. Rather, know the difference between wealth and income. If you have a steady income and are confident of your cash flow, keep investing to fulfill your long-term financial goals. As a lot of quality stocks are available at attractive valuations, consider enhancing exposure to equity by investing more in equity mutual funds.
No matter the volatility, do not stop investing regularly through Kim’s Investment Club (KIC). If you stop your KIC, you will not be able reap the benefit of trade averaging, thus beating the very purpose of investing through KIC After the crisis has blown over, you will find that remaining invested has its merits in the long term as the markets normalise.
Slash the debt
Banks are doling out low-interest rate loans at this stage. While it may be tempting to avail of these offers given that you may have had to take a pay cut or let go of a salary hike, it is wise to reduce debt. In fact, if you are paying a high interest rate on a loan, you may want to consider repaying it as soon as you can.
Lastly, and most importantly, cut down on unnecessary expenses. If there is anything that these lockdowns have taught us, it is that we can easily get by with just the essentials in life. A little bit of sacrifices but cutting corners will help us all in these times of uncertainty. You can consider that money you are saving now to enhance your contingency fund. A liquid fund may be an ideal choice for the same.