A 5-point plan: How to rescue your retirement from Covid-19 impact
3 min read . Updated: 16 Jul 2020, 03:49 PM IST- Quantum AMC shares a '5-point plan' to deal with the impact of covid19 on their retirement planning
“Imagine it's 2021. The world now has the perfect treatment for Covid-19. There's a proven vaccine to protect you from the virus. The fear of dying from Covid-19 is history…..Now, that would be something, right..!!," says Quantum AMC encouraging its investors in a note sent by e-mails. The AMC gave five recommendations for you to deal with the impact of Covid-19 on your retirement plans.
Quantum AMC is confident that if you put these five recommendations to work, by the end of the exercise, you will be far better planned.
“Health issues aside, Covid-19 has wrecked the financial plans of many, probably you too. And if you dismiss this now, you could jeopardize your retirement plans irreversibly," says Quantum AMC in the note.
Here is Quantum AMC’s 5 point plan to deal with Covid-19's impact on your retirement plans.
1. Cut back expenses, invest savings
The AMC in its note asks investors to trim expenses wherever possible. This is especially true if you are facing a job loss or income cut. “The lockdown is a boon as it enables us to easily cut back on shopping, eating out, travel and everyday commute. Use this timewisely to cut back on unnecessary expenses. The more you save today, the more you can invest...and therefore the better your chances are of building a healthy retirement corpus," says the note.
2. Realign your goals, add more income streams
Accept that your pre-Covid investment strategy may not serve you well post-Covid. This is especially relevant advice if your income has declined during the lockdown or if your investments are now fetching you a lower ROI.
Quantum AMC recommends you to first find ways to reinstate your income to the pre-Covid levels. “You and even your spouse may want to consider adding new income channels by trying to monetize your skills and hobbies. The more your income, the more you can invest. This will go a long way in helping you get back on track as far as your retirement plan is concerned," says Quantum AMC in its note.
3. Renegotiate EMIs
Interest rates on most retail loans have fallen sharply over the last few months. This has made it possible to cut down on your EMI payments.
The AMC advises you to call your bank and renegotiate your EMIs and direct those savings to your retirement plan.
4. Reassess your portfolio, consider more allocation to equities
Times like these are best to take a complete review of your asset allocation.
“Check if it's in line with what you had planned. If not, now's the time to make corrections," alerts the AMC. Within the various asset classes be sure you are in the right investment avenues, the note ads.
When it comes to equity, select the fund carefully. Ensure it suits your risk profile. Yes, aggressive equity funds rise fast, and they fall fast too. See what suits you best and be sure you are in those funds.
In short, use this opportunity to make every Rupee count.
5. Review your retirement goals
Quantum AMC says, “ If you are someone who's in the early phase of their career, you can quickly recover from the Covid-19 setback. All you may need to do is just save more or hope over time you can grow your income faster."
A mid-career or senior professional may however require a review of retirement goals itself, the note adds.
Depending on how close you are to your retirement, you may need to scale back your retirement corpus goals.
To sum it up, Quantum AMC says, “If required, consider delaying your retirement by a few years in order to achieve your desired corpus. This is the hard truth. But then it's better to be planned well than to get hit by an unpleasant surprise on the cusp of your retirement."
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