Spooked by the COVID-19 market turmoil? Rather than abandoning your financial goals and stuffing all your cash under your mattress hoping it’ll be untouched by economic consequences of the coronavirus, why not find a safe haven for it? After all, the financial climate is likely to eventually improve. And when that happens, you’d be in a stronger financial position to achieve your dreams than if you had done nothing, or worse, made hasty decisions out of fear.
Here are our recommendations for keeping your money safe during a crisis:
Set up an emergency fund. No one knows when you’ll need it, but it’ll help tide you through contingencies like a serious illness or retrenchment and protect the savings you’ve taken years to build. Put aside three to six months of your salary, ensuring enough for medical needs and food. Park it in a passbook savings account reserved for a crisis, and leave the bank card at home so the money is safe from impulse spending (which can sometimes be more crushing than a market crash!).
Don’t scramble to withdraw all your money. COVID-19 market fears may make you think it’s safer to have all your cash in hand, in case a market collapse locks you out of your savings. Under the Deposit Insurance Scheme however, Singapore dollar deposits with member banks are insured up to S$75,000 per bank, so leave your money there; it’s as safe as it can be.
Drop the panic-buying. Access to cash helps you survive in dire times, but using it to turn half your home into a grocery store so you can go into COVID-19 self-isolation for two months isn’t necessary. Our food supply isn’t under threat and the government has repeatedly assured that we have enough essential supplies. Hoarding could damage your wallet, more so if you’ve fallen prey to inflated prices on goods – not to mention leave you with a shelf full of canned sardines that you’ll have to eat for a long time after normalcy returns. Be socially responsible, buy only what you need, and use up those unopened packs of bread flour and couscous that’ve been sitting in your pantry for months.
Consider products that give guaranteed payouts. Economic slumps don’t always mean you have to dump your financial goals. Your money can continue to grow, just not at the rates you’d expect. While it’d be impossible to find high-yield products, you can find products that offer important guarantees so you don’t have to worry about losing your capital and can be assured of returns. Aviva’s MyLifeIncome, for instance, is a savings plan that gives annual payouts for life that you can use any way you choose. There’s a high annual payout of up to 6.35% of the sum assured, made up of a 0.95% guaranteed portion and a non-guaranteed cash bonus portion that’ll give you a cool payout of up to 5.4%. Ideal for the risk-averse, the plan gives at least 100% of your money back if you choose to surrender the policy after the end of your chosen accumulation period.
The moral of the story: when a storm like COVID-19 looms, stay calm and don’t let fear get the better of you. Acting responsibly while shoring up your defenses is the best way to protect your finances, safeguard your dreams and approach the future with confidence.
Confused about your next move in an uncertain market? For help on how to secure your finances or to learn more about products that give you guaranteed payouts, leave down your details in the form below and we’ll be in touch.