The ongoing Covid-19 pandemic is an exceptional time in the history of mankind. What started as a health emergency is no longer limited to a health emergency but has negatively impacted all aspects of life and has altered the financial situation for millions.

If you are one of the many who have been COVID-flecting your financial matters, then it is important to understand that your goals don’t essentially change but how you prioritize changes. Your need-based financial goals like retirement planning, children’s education continue to be important and should not be tampered with.

So, as you re-evaluate your goals here are few things one can focus on in the light of the current situation:

Your long-term financial goals

For financial goals that are still five or more years away, one may not stress about those due to the current situation. Financial planning for long-term goals is done keeping in mind the market volatility. If you have a well-diversified mutual fund portfolio and are looking at a longer time horizon, then one may not panic and continue your investments. If you have been investing in equity for goals like buying a house or paying for children’s higher education and retirement with a long-term horizon then you should continue investing.

Your short-term goals

You may have started this year with great zeal and pictured yourself fulfilling a whole list of things you wanted to do in the year. Perhaps you planned to travel to an exotic destination this year, replace your old car or buy a bigger house but the pandemic has changed that picture for you completely and impacted your saving, investing, and spending. Some of these goals may need to review in light of the current situation-

1. Your holiday fund

   A holiday is definitely off the table in the current situation and even in the best-case scenario it may we may not have to spend our next summer holidays in a lockdown, but travelling still may not be on the top of your list. So, while you still have your holiday fund in place, you may want to move a part of this fund towards your other important goals.

2. Your emergency corpus

   If there is any big financial learning from this global pandemic it is the need to have sufficient savings in your emergency funds and those who saw their income shrink know that the bigger this fund, the better it is. If your income is not affected by the current crisis and you may consider beefing up your emergency fund. Your emergency fund should ideally be big enough to cover at least six months of your living expenses in the absence of your regular income.

3. Portfolio-rebalancing

   It is important to assess your portfolio holdings and current risk appetite and decide the asset allocation in your portfolio. If there is any change in your situation then the same reflects in your portfolio.

CONCLUSION

Times are tough and we all have to adapt ourselves to the New Normal but that does not change the need for financial planning.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.