The Covid-19 crisis had erupted
late last year from China and spread all across the globe like a wildfire. The
pandemic has so far claimed lives all over the world and infected millions.
Everyone is hoping that a vaccine will be able to curb it significantly. It
will bring the confidence of investors back. The Covid-19 outbreak compelled governments
globally to resort to stringent measures that may include lockdown and tough
quarantine steps in a bid to contain it. The only silver lining that we may
think of is that there are several investment lessons from Covid-19 crisis that
we can consider to keep ourselves safe and secure.
Emergency
funds: The pandemic has taught us the significance of
emergency funds. It is important to allocate some emergency funds as any
emergency would require such funds. The cash will prove quite useful when all
of sudden you become unsure how to arrange the basic things. Several
individuals were compelled to exhaust their avenues that may put them in poor
financial situation in the longer run. In the absence of good planning, you may
have to rely on your credit card or superannuation fund. Some people accept a
loan repayment holiday that may put them in bad financial condition. If you
have money to fall back on, you will be able to sustain a tough condition. You
do not have to allocate massive cash in your emergency funds account. If you
add just a few dollars from each pay cheque or other source of income will be
sufficient. When you face any cash flow crisis, the emergency fund will come to
your rescue.
Build
a humble budget: When you have a household budget in place,
you can easily find out what you have been spending and where you need to make
cuts. Smart budgeters love to remain on top of their expenditures. They are aware
when bills will get due, how to avoid late fees, review insurance annually in a
bid to seize the best deal, and forecast what incomes will come in the near
future. So you must ensure that you have an effective spending and investment
plan in place as it has emerged a powerful tool.
Invest
in yourself: It is significant to invest in enhancing
your educations and skills. The more you invest in your skills, the stronger
will be your earning potential during any crisis. The higher you earn during
your working lives, the stronger you will be financially for retirement. There
are many courses that you can take up online and availability of government
subsidies will make several courses economical or even free of cost.
You will face less risk in diversity: If you have purchased shares
in the leading supermarkets or invested in Zoom, you would have witnessed that
value of your investment rise while many others tumbled during a crisis. There
is a strong likelihood that some investments perform better than others during
a crisis. Therefore, diversification plays a vital role. You must not have all
your investment eggs in one basket as it will help you avoid complete wipeout.
.
Top Performing and Worst Performing Sectors
Amid the ongoing crisis, the
ASX systems ended up halting all trading. However, the Australian markets fared
well as the Financial Services sector remained up over 5%, the Energy sector
also remained higher at 5% and consumer discretionary too remained up by 2%.
Meanwhile, the Information Technology sector emerged as the worst-performing
sector as it remained down approximately 2%. Utility sector too bore the brunt
and witnessed a decline by 1%. Communications Services also stayed in the red
zone.
Bottom Line:
The Australia Market may
witness a surge as markets continue to rebound globally. The reports of the
possible arrival of an effective vaccine led the markets to rise for 12 of the
last 13 trading days. Markets achieved a mammoth gain of approximately 10%
following these reports. Amid the present volatilities that have gripped the market,
it is not wise to take risks. Wait and see is the best approach for now. In
these tumultuous times, quality blue-chip stocks should on your watch list. At
the same time, it is essential to take vital investment lessons from any crisis
so that you can equip yourself in preparation for future crises.
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