With COVID-19 lockdowns coming to an end in America, the rest of the world is soon to follow, and that includes Canada. Ontario will remain in lockdown longer than other provinces, but all indicators point to a re-opening of business and a restart of the economy, with some social distancing practices still in effect.
This is good news, especially at a time when the public is growing increasingly irate. When the doors finally open again, we’ll have a lot of catching up to do. That also includes taking into account your personal wealth. It’s not impossible to grow your money, even during the expectedly turbulent economic climate that will follow the COVID-19 epidemic. Here’s some tips to remember.
#1) Take Government Money
Many Canadians are still hesitating to sign up for the Federal government’s COVID-19 aid package, but that’s a major mistake. If you qualify, you should absolutely take the money that’s offered. The aid package has been reworked, and will soon allow those suffering reduced hours to apply for aid, as well. If you’re on the fence as to whether to take a government hand out, remember – this is not a loan, nor an EI payment. The government has mandated a lockdown, which means you may not be permitted to work. In exchange for this, the government must compensate you for your loss. Don’t feel bad about this. It could mean the difference between maintaining your wealth, and having to dip into your savings when you really ought not to.
#2) Be Careful About Investing
While the hammered stock market might look like an enticing prospect to invest in (buy low, sell high), it’s not quite that simple. Be very careful about what stocks you’re investing in, and always remember the “when” factor. Be mindful of the yo-yo effect that the oil industry has gone through over the past few weeks, which can differ dramatically within the space of 24 hours. Consult your financial adviser regarding your readiness to invest, and how to go about it. The right investment could pay off. The wrong investment, such as in a company that has been throttled by the COVID-19 crisis and forced to go under, could end up costing you money.
#3) Don’t Compare COVID-19 To 2008
While many are comparing the economic crisis caused by the Coronavirus pandemic to the 2008 recession, this is unwise and unreliable. The 2008 recession was caused by too much leverage, whereas the COVID-19 outbreak was a freak anomaly. For all the talk of interest rate cuts, it won’t mean much in an era when nobody is willing to go out and start a business, or invest heavily in an idea. A bounce-back could occur fast, or it could take months, but it’s going to be much harder to gauge than a traditional 10 year/avg recession. Staying on top of the situation means exactly that – keeping your ear to the ground and keeping track of the markets and how they react to the recovery period.
#4) Don’t Bet On The Bear
With so much economic uncertainty, lost jobs and bankrupt businesses, it’s easy for anyone to bet on a Bear Market, but that might not be wise. While it’s certainly good practice to remain cautious, care should be taken not to remain in pessimistic territory. The speed of a recovery period will depend on multiple factors, one of which is a vaccine production date. The University of Oxford recently claimed a breakthrough that would allow them to produce millions of COVID-19 vaccinations by the beginning of September. If this turns out to be true, expect the economy to rebound much faster than anyone previously thought. In the meantime, consider divvying up your wealth into other options which can lead to growth.
#5) Restructure Your Spending
You may have already been forced to do this, but now might be a good time to train yourself to trim any unnecessary fat off your monthly spending. Don’t stop there, however. With market uncertainty hovering over the economy for at least a year, now might not be the best time to make major purchases. This will differ depending on your personal financial situation, but it goes without saying that if you’re less well off than your neighbor, you may want to forego that attractive deal on a new car, and wait until next year. While you’re at it, identify anything that is gobbling up your money, from streaming subscriptions you never use, to your Amazon Prime purchases. Growing your wealth means retaining more money than you’re spending, and while this balancing act will vary depending on the person, it’s good practice, especially with an economy on such shaky ground.
A little bit of optimism and healthy caution will go a long way to growing your wealth beyond the COVID-19 pandemic. When the recovery phase does kick in, make sure to spend wisely, invest even wiser, and take a good hard look where those pennies are going. If you do, the dollars should take care of themselves. For more information on growing your wealth during the pandemic crisis, contact us today!