Managing your money/investments during the coronavirus pandemic

Managing your money/investments during the coronavirus pandemic

Pulse speaks to a Financial Advisor about how you should manage your money and investments at this time.
   
   
   
       
       
           
               
                   

Pulse speaks to a Financial Advisor about how you should manage your money and investments at this time.

               
           
               
                   

It’s dire times for everyone as the coronavirus continues to ravage the world putting a huge strain on healthcare and economies around the world.

               
           
               
                   

From the United States to China and Europe, the restrictions on air travel, lockdown in countries have caused economies all around the world to shrink.

               
           
               
                   

China, where the coronavirus originated from, has seen their economy shrink 6.8% in the first three months of 2020 while the lockdown in the United States of America has led to the closure of several businesses which led to more than 20 million people filing for unemployment checks.

               
           
               
                   

It’s the same story all over the world but for Nigeria, it is expected to be direr.

               
           
               
                   

Plunging oil price

               
           
               
                   

While economies around the world are just reeling from the effects of the coronavirus, the plunging oil price puts Africa’s largest economy in a precarious position. One of the prime concerns this brings is the Naira exchange rate.

               
           
               
                   

“If coronavirus goes away, we still have to battle with oil prices. With the low oil prices, If oil prices are low we are going to have that dollar situation,” Damilol Alonge, a financial advisor told Pulse.

               
           
               
                   

The Naira was last devalued in 2016 and Alonge said another devaluation, slightly about N400 should be expected.

               
           
               
                   

“The Central Bank of Nigeria (CBN) can not continue to defend the Naira with the reserve we have.

               
           
               
                   

“We are currently about 35b dollars. If it goes below 30b dollars the Governor of CBN says he will devalue the naira.

               
           
               
                   

“We expect the economy to move at this level. We have a current account deficit, reserves are low, oil prices are low. We might enter a recession if there are not enough economic activities.”

               
           
               
                   

But how should people prepare for this?

               
           
               
                   

Alonge gave us five tips on how to mange money and investments this period.

               
           
               
                   

1. Stay risk-averse

               
           
               
                   

Alonge advised people to have their money in low-risk investments like Money Market.

               
           
               
                   

“Until this goes away, then you can start looking to re-enter the market,” he said.

               
           
               
                   

2. Investment in foreign currencies

               
           
               
                   

Alonge believes that there are a lot of investment lessons to be learnt from all of these especially for people who didn’t invest in foreign currencies.

               
           
               
                   

“It is too late now to go into the dollar market with your naira, it should have happened before this crisis,” he said.

               
           
               
                   

3. Investments

               
           
               
                   

                                   

Worshipers in Jigawa to use facemasks for Friday prayers. (TheNationalInterest)

               

               
           
               
                   

Alonge advised investments in essentials, especially things that would be needed in the new world that has been created by the coronavirus, something like the production of sanitizers and face masks.

               
           
               
                   

He also advised on investing in good companies.

               
           
               
                   

“Prepare to start buying assets at a cheaper valuation. You can buy some of these stocks because a lot of them have good dividend yield,” he said.

               
           
               
                   

“During this period of crisis, they are opportunities that present themselves, asset prices go down because people are scared.

               
           
               
                   

“Check to see how you can buy assets that have fallen in value, all sorts of financial assets

               
           
               
                   

“When there is a panic, prices drop so it gives an individual an opportunity to buy into that asset.

               
           
               
                   

“Start looking at healthy companies and see how you can buy into those companies at a cheaper price.

               
           
               
                   

4. Review budget

               
           
               
                   

This time also calls for a review of your budget and spending.

               
           
               
                   

“Review your budget, personal budget, look at things you don't need and cut down on your expenses this period, stay cautious and stay liquid. Also, have a lot of cash in your hands,” Alonge said.

               
           
               
                   

5. Equip yourself

               
           
               
                   

A lot of job losses will come with the economic downtime and Alonge advised that people invest in themselves to be equipped in the job market.

               
           
               
                   

“Spend money on online courses and take advantage. Coding, anything you can learn. put some money to build your skills that can also fetch you money,” he said.

Source: Managing your money/investments during the coronavirus pandemic

- gist culled from pulseng