There has been a lot of headline news about coronavirus. It has almost become normal to hear the news that would not be normal on any other day. From countries reporting their first cases to countries reporting escalating cases of infections and other related statistics, the news keep coming. And the guidelines on how to keep high levels of hygiene. This news and developments have caused some level of uncertainties in the stock market and financial sector in general. The financial sector is the reflection of trade-in economies and so when movement is subdued and there are lockdowns in some parts of the globe then preserving human life becomes the most important thing and numbers and commerce become of little meaning.
This is a black swan event meaning that its outcomes are improbable. We recognize that these are unprecedented times of uncertainty for everyone-we want to remind you that you are not alone. While we may not have all the answers, we hope to provide you with some guidance on what to do with your money during these times. We don’t know how long this is going to last or the form that it will take. Under such circumstances, cash preservation takes precedence over investing or speculation.
First, we want to say to everyone to stay safe and follow the guidelines provided by the government to reduce the spread of the pandemic. Financial markets hate uncertainty because when an investor invests, they are betting that the sun will rise tomorrow and that tomorrow won’t be dim. That is why we are seeing indiscriminate selling of shares of listed companies now. Retrospectively, investors tend to overreact to bad news than good news. The coronavirus issues have been compounded by the oil trade war between Russia and Saudi Arabia. The stock market is being hit with the “one, two punch” that Warren Buffet described in his recent interview on March 11, 2020.
Just a few weeks ago, we were talking of the then-upcoming March to May dividend rally but that is an unlikely possibility now. That is just how fast things can change.
Since we do not know how long this is going to take and things could get worse before they get better, here are 5 things that you can do with your money.
1. Don’t panic
This might be easier said than done but it is very important because fear can take the best of us. Calmness is therefore of great importance. Jim Stockdale who was the highest-ranking US Military officer in Hanoi Hilton prisoner-of-war camp during the heights of the Vietnam war said “I never lost faith in the end of the story, I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade.”
Take advantage of this time to start meditating or doing other activities to keep you centred and calm and talk with trusted family members and friends about any fears that you might have.
2. Review your budget and cut out any unnecessary expenses
Cut down on the non-essentials items. With any freed up cash you create by eliminating or reducing expenses, you can better be prepared to handle any unforeseen circumstances arising from the pandemic.
3. Don’t invest short term money into long term investments like the stock market just yet.
The reason is because you never want to take money from your investment such as the stock market when they may be down because of market risk like we are witnessing right now.
4. Be liquid. Stockpile some cash
Having more cash during this time can help you with any potentially reduced income. The ability to quickly access any cash that you might need now in case of an eventuality is also very important and especially following on the guideline from President Uhuru Kenyatta on the need to reduce the use of banknotes to reduce the spread of the pandemic. Cashless transactions such as mobile money and money banking have seen their transactions reduced or zero-rated in some cases.
5. Live & just breathe. This Too Shall Pass
Now is the time to just live life. The greatest resource we have in the world is the human desire to live – and to survive in times of crisis
Hope this provided you some helpful insight to help you during this time.
Be safe and most important of all, stay healthy.