Source: Bondora
Considering the increased vulnerability of
our economy due to three major events – a new government, low oil prices and
the Covid-19 pandemic--stock market performance in 1Q2020 was very weak. The
FBMKLCI dropped by 16.6% Year-to-Date (24th March 2020).
With
MCO extended up to 9th June 2020, this may bring further losses to businesses
and drive up unemployment. Even after the MCO is lifted, the Malaysian economy
will require some time to bounce back. Where should we put our money during these
challenging times?
People should at least know the Dos and Don’ts
of personal finance during a crisis. According to Focus Malaysia (22nd
April 2020), Professor Dr Yeah Kim Leng from Sunway University Business School suggested
that people should make financial decisions based on their priorities. Here’s
how:
1. Take up moratoriums on loan repayments
If you have liquidity issue, take up the
moratorium and keep the money for emergencies. For people who do not need cash
flow, they can take advantage of this “payment holiday” and use the money in
hand to enhance
passive income by making investments that can generate returns higher than
repayment costs. Put the money into fixed deposits, bonds and unit trusts with
fixed income that are stable as opposed to equity funds that are suffering
losses.
2. Manage your debt
Pay off credit card debts or convert them
into term loan as soon as possible because loans have lower interest charges.
3. Look for other income sources
Even if you are not facing retrenchment
risk, this is a good timing for you to take up supplementary work. There is
great demand for online work and in the delivery services sector.
4. Do research
Now is not the time to venture into
unfamiliar territories. Study your financial books i.e. accounts, statements
and gauge how long your funds can sustain you and how to maximise your cash
savings. Don’t be tempted to follow blindly when it comes to investments. Do
your research and stick to your portfolio to be safe.
5. Stay put
After the MCO is lifted, the market will
be flooded with job seekers. Therefore, job retention is important. If you’re
thinking of retiring, make sure you have a good wealth plan.
Not only during crisis or recession,
people should always be mindful with their personal finances. Emergency fund of
six months or more is a must especially for a period like this. Understand your
critical needs – to earn more or save more? If you have a family to feed, make
sure you think of them whenever you plan. And that starts now.
Reference:
1.
The dos and don’ts of personal finance during a
crisis, Focus Malaysia, 22 April 2020
2. Preparing
Your Finances for a Recession, U.S. News, 25 March 2020
3.
2Q2020 Outlook & Strategy, Maybank Asset
Management
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