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Investing towards retirement during COVID-19

MAXWELL Phiri.

ANALYSIS: MAXWELL PHIRI
IT IS now a known fact that globally the coronavirus disease (COVID-19) is damaging the economies of many nations and the stock markets are viciously shaken due to the financial spiral effect of marketplaces.
Big trading economies such as China and the United States of America have not been spared with the scaling down of the marketplaces.
Equally, Africa’s well-renowned economies such as South Africa have gone into a 21-day lockdown in terms of major economic activities.
For Zambia, being a landlocked country and whose main trading partners include neighbouring countries such as South Africa, it goes without saying that as a country we should remain alert because to be forewarned is to be forearmed.
The financial markets are crumbling nearly everywhere at the speed of light, hence the need to have an open mind.
The supply chain is at risk during the COVID-19 outbreak. Many potential pension contributors have been put on recess, some on half pay, and under worst-case scenarios some have lost their jobs, and this has a trickle-down effect on pension houses.
In this environment of uncertainty, I am very certain that we will come out of this difficult period with the help of God.
Considering all of this uncertainty, we all need to make some financial changes to ensure that we survive the next few months, whatever they may bring. The Government has made some commendable steps to ensure that the epidemic is contained, but there are steps you can take right now to increase your financial security over the coming weeks. Here are three of them to consider.
1. Build an emergency fund
Those without an emergency fund who are still able to work should begin saving 15 percent of their income in case their company is forced to close due to the pandemic. The typical guideline is to have enough cash on hand to cover at least three months’ worth of living expenses, but in the current climate, saving six months of living expenses is best if you are able to do so because it is possible the economic repercussions of COVID-19 will outlive the disease itself as it will take a bit of time for some economies to be up and running to their full capacity.
Saving might not be as difficult as it normally would be. With restaurants, sports arenas, movie theatres, and virtually every other form of group entertainment currently closed, cancelled, or banned for safety reasons, there is not as much to spend your money on right now. For those that prepare food for the school kids and other necessary costs such as transport for the kids from and to school during this time of the school recess, you may agree that savings have been made to a certain extent, hence for some of you, this might be an opportunity to increase your savings to 30 percent on your total income.
2. Review your budget
Work on reviewing your budget back for the next few months. Of course, you still need to pay for food, housing, insurance, utilities, and possibly transportation to and from work if you are not working from home or ordered to self-isolate. But if there are any extra costs in your usual budget besides this, consider cutting them out until life gets back to normal. Put any extra money towards your emergency fund.
Make a new list of your expenses and compare this against your new income or emergency savings. Tweak your budget as needed until you find a workable solution to get you through the next couple of weeks or months. If you are really struggling, you may have to take out a personal loan to hold you over. Avoid credit card debt and payday loans whenever possible, as this could create a longer-term financial crisis due to the high interest rates on these types of credit.
3. Conduct a personal audit
In life, whatever money you come across, you can do three things with it: it’s either you waste your money, you invest your money, or you lose your money. The rich invest their money, the middle class lose the money, and the poor waste the money.
Furthermore, the poor buy stuff which turn out to be liabilities. Stuff are items that we repeat buying as part of the household goods. This is the reason that you need to conduct a personal audit on a regular basis to ascertain your personal wealth.  This is not the period to appear to be rich when you are not. Live within your financial perimeters by ensuring that you reduce on the cost on non-essentials.
Do more with little resources, otherwise the economic repercussions will be the order of the day during this epidemic.
My passion is to ensure that you remain smiling during and after the COVID-19 outbreak
Remember, my passion is not to see you retire in a state of destitution and financially broke, but retire as a smiling retiree.
Till next time, keep on sanitising yourself regularly

The author is a seasoned retirement advisor.


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