The COVID- 19 outbreak has taken the world by complete surprise. The sudden “income shock” that many professionals and business owners have experienced occurred without warning and nobody can be certain how much longer it will endure for.
The spread of the virus creates significant implications, sending shocks to the world’s economy. The economy impact was immediate; it disrupted the domestic consumption as consumers cut spending, there were mass cancellations and travel restrictions as well as shifts in healthcare spending.
The Malaysian government has launched a series of economic stimulus packages designed to cushion the economic effects of the pandemic, such as the monthly financial aid of RM600 from the Social Security Organization (SOCSO) to employees on forced unpaid leave and allowing a withdrawal of RM500 from Employees Provident Fund (EPF).
While some factors affecting the financial well-being are beyond individual control, financial knowledge can help people better manage their finances through times of hardship and times of prosperity.
COVID-19 has made it aware to all Malaysians how important emergency funds are. Budgeting is more than just paper planning; it is the backbone to personal finance and wealth management. It is more important than ever to ensure household have financial security and are working effectively to achieve financial or lifestyle goals.
Budgeting helps ensure that individual have the right amount of money at the right time. And when we do budgeting, we must deal with both regular events and extremely uncertain events. Today, there are numerous software and templates that help with personal budgeting.
Investing is not always comfortable, but it is important to remember that without risk, there are no returns. As the world continues to reel from the impact of COVID-19, many of us are worried about what the pandemic means for us financially.
Multi-asset strategy refers to the type of investment strategy that involves investing in various asset classes. Typically, a multi-asset strategy uses an asset allocation program on top of the sub-strategies that invest in individual asset classes.
This offers a flexibility that allows for a shift away from specific market-driven performance to more absolute return and other outcome-oriented solutions that strive for greater control over risk exposures.
DCA strategy implements the regular and periodic purchasing of investment. DCA gained popularity among financial advisers and individual investors after the Great Depression throughout mid-1960s. With a high probability of losing a job or receiving a pay cut, investors may want to look at their risk appetite again. For instance, with income taking a hit, investors should lower the risk from their portfolio too.
Though investments may all be in red at the moment, but we must recognize the fact that we will not experience a loss until we sell them off. Anyone can have financial problems regardless of their income or profession. The first thing to do is to accept that the life is going to be different for a while and then focus on the tasks that we can control.
The fact that someone is earning a high salary does not necessarily mean that they are automatically financially solvent. In times of an economic crisis, we encourage people to get advice from their financial advisor.
Written by Simon Lim, Investment Research Intern