备用或打包:T的行动计划hese Uncertain TimesCOVID-19 has left an indelible impact on the year and on us, changing our perspectives towards life and finances, irrevocably

The year 2018 brought a new acronym into the business landscape—VUCA (volatile, uncertain, complex and ambiguous). While 2019 made this acronym common in management textbooks and boardroom presentations, 2020 ensured we experienced the impact of VUCA, first hand.

The better part of circa 2020 has been eclipsed by COVID-19. What started off as an infectious virus epidemic in China is today a global pandemic, the scale of which we have never witnessed before. International economic activity—developed and emerging—both are at an absolute standstill. Gains made by investors over years of painstaking financial discipline, have been wiped out as markets nosedive in the face of investor panic and lack of confidence. Add to that, with job losses and pay cuts. 2020 is akin to a survival challenge for many.

The financial crisis that we currently face has no historical comparison. It is unprecedented and more significantly, we are not sure when the curve will flatten to allow for normalcy, or what can be considered the new normal. COVID-19 has left an indelible impact on the year and on us, changing our perspectives towards life and finances, irrevocably.

One thing is certain though, these desperate times call for disciplined and robust measures. What each of us needs to do is stay calm and cautious, weighing each investment decision carefully and with a long-term perspective. We need a plan to effectively navigate through these choppy times and emerge financially stronger. So, what would this plan comprise and how do we go about it? Here's what we need to do.

Focus on your goals and segregate them

The objective of any investment is to achieve a set of financial goals, within a particular period of time. What becomes important in this context is your unwavering focus of these goals. In times such as this, when liquidity is tight and income is uncertain, you need to get back to the drawing board and reassess your goals.

This is an opportune time to segregate your goals into what is negotiable and what is non-negotiable. Defer your negotiable goals by a few years. For instance, postpone buying a new car or that foreign holiday until things normalize. Similarly, as an entrepreneur, postpone buying your own office space or expansion plans, unless absolutely necessary. Compromising on your negotiable goals, makes space for your non-negotiable milestones such as your children's education, your retirement or even payments to your employees or vendors, that can't be indefinitely postponed.

Evaluate your tolerance for risk

It's an irony, that more often than not, risk tolerance is gauged from a set of finite questions. However, events such as these mark a true test of your risk appetite. While it's easy to tell investors not to get deterred by market swings and exit in panic, it is difficult to put in this action. Watching your hard earned corpus erode in value, given falling stock valuations, is enough to make even a seasoned investor, question his decisions.

The present situation though, is a blessing in disguise. With several myths being busted, investors can now have a realistic understanding of their risk appetite to invest accordingly.

In business, as in personal finance, gauge your expenses and liabilities in comparison to your savings and income. Find avenues to trim your costs and save monies. Be prudent with your working capital and stretch it as much as you possibly can. This is a time for you to make every rupee work harder than before—both to earn and to spend.

Prudent asset allocation

Investment experts religiously follow a scientific approach to asset allocation. Simply put, the right allocation can help you achieve your financial goals and ensure other assets step up to boost your portfolio, in case any particular investment underperforms. However, inherent biases controlling investment decisions can not only lead to sub-optimal returns but can also be a cause for major heartburn. This stands true for individual investors or entrepreneurs.

Diligently practice the art of asset allocation and ensure you diversify your portfolio wisely. Do re-evaluate your investments with a microscopic view, but avoid tinkering with it, imposing your own perspectives.

For example, while equities have taken a beating recently, quitting the markets now, would turn your notional losses into actual ones. Equally essential is to avoid going overboard. Just because some stocks may be available at attractive valuations, doesn't mean you have to buy them.

Top priority—protect financial interests

Amid all the chaos, it's easy to overlook the financial interests of your family. If you are the sole breadwinner of your family, your objective should be to plan for the worst. Look to replace lost income in case of any exigencies. This can be easily achieved with a term life insurance plan.

Meanwhile, for those of you who are business owners, I would urge you to strengthen your corporate governance framework to bring more transparency in organisational functioning. Reflect on your business models and tweak them where needed. Prioritize the long-term financial health of your organization or start-up by curtailing costs and focusing on what is essential.

Avoid diverting funds from important goals

With uncertainty looming large, it's easy to lose sight of the bigger picture. You may be tempted to divert funds from essential goals such as retirement to maintain present liquidity needs. Doing so is detrimental, be it as a business owner or a salaried professional as this can jeopardize your non-negotiable goals and leave you vulnerable in the long-term.

Instead, bank on your emergency corpus to tide the crisis and replenish this, once things get back on track. Continue investing in a mix of fixed income and market-linked products, to build your emergency fund and avoid dipping into your retirement kitty, as much as possible.

In Summary

Times are challenging and we are faced with decisions that can directly impact our long-term financial prospects. This is the time to stay calm and rational. Do not mix your personal savings and investments with that of your business as this can lead to a conflict of interest and poor decision making, both of which, have long-term repercussions.

Stay focused and have faith in your abilities. This too shall pass.