Impact of COVID-19 on your retirement planning
The world today is undergoing a panic situation due to Coronavirus outbreak thereby, infecting lakhs of people around the world; taking death toll close to 80,000-mark. This unfortunate event led to the current lockdown, which is impacting the global economy. The major indices also tumbled due to this. Even recently, the interest rates on small savings schemes have dropped considerably. This shows that even the debt market is going through a rough patch. Although the things would change once the vaccine for the pandemic becomes available. But in such a situation, your retirement planning will be impacted. So, let’s find out what should one do in such a situation.
Retired
If you are already retired and have a retirement plan in place then, just follow the same. If your retirement plan has not accounted for such a crisis then, it would be wise to consult your financial advisor and take necessary actions to cope up with such a crisis.
If your retirement planning has been done using the bucket investment strategy then, you should not worry. You just need to review your medium-term bucket and make necessary adjustments if required. Retirement period being conservative, it is important to have at least five to ten years of your expenses in safer investments. Also, do not forget to rebalance your portfolio annually.
Retirement in next 10 years
In such a scenario, you must have accumulated adequate assets to support your retirement. Now, it’s time to review your retirement plan and make necessary adjustments. However, if you are not having a retirement plan in place, then it is highly recommended that you have that first. This will help you to tide your retirement journey with ease where majority of the things have been taken care of.
If in case you have not accumulated enough assets due to inefficient money management, then now, it’s high time that you make maximum savings possible and dedicate it towards your retirement. Looking at the current market scenario, it would be wise to aggressively invest in equities. This will help you to accumulate quite a bit of wealth initially when the market recovers and reverses to bull phase. Post which, you’ll have a balanced portfolio of equity and debt.
Retirement in more than 10 years
If your retirement is still way ahead, grab this opportunity to accumulate a sizable wealth. Currently, various quality stocks are available at cheap valuations, especially the bluechips. Also, in terms of mutual funds, this would be the right time to start SIP in a well-diversified equity mutual fund portfolio or you may also consider investing in multi-cap fund and let the fund manager decide an appropriate asset allocation. However, in case, you have to invest in lump sum then, invest in a staggered manner. Do not invest in a rush. The markets are still pretty much volatile and hence, it would give you a lot more opportunities to buy at different levels.