Five Tips to Get Smarter with Wealth Management During COVID Times


Money is one of the greatest assets to any individual or company. It helps at a better functioning of life and business. The world has been engrossed in a worldwide pandemic since November 2019. This has led to great loss and a slower influx of wealth.

With the virus coming in with newer mutations, it is unclear when this situation would end. In such times, it is very important to manage your wealth in a smart way to ensure greater profits and reduce risks. To help you with it, here is the R5 Rule – Re-evaluate, Resort, Reset, Revise, and Rebalance.

  1. RE-EVALUATE YOUR TOLERANCE TO RISK.
    Globally, the overall economic scenario is deteriorating. In fact, it would not be incorrect to say that we are on the verge of a financial crisis. India is experiencing one of its worst economic downturns since its independence in 1947. There is a severe cash shortage as a result of the critical hardships that businesses and individuals alike are experiencing.
    When markets are this volatile, with no signs of recovery or clarity about the future, each of us must reassess our risk profile and determine our risk tolerance. If you incorrectly assess yourself as risk-aggressive during such difficult times, when in reality, your risk tolerance has declined, you may end up causing irreparable financial damage.
  2. RESORT MULTIPLE INCOME SOURCES
    The COVID-19 crisis has raised legitimate concerns about our country's financial stability in the future. Layoffs, pay cuts, and large and successful companies declaring bankruptcy have all become commonplace. As a result, the need to think of alternative ways to generate income from multiple sources is more pressing now than ever. We can't rely on just one source of income.
    People now have a lot of free time on their hands as a result of the lockdown, which they are using to come up with creative solutions to their financial problems. Consider turning your hobbies into a business, taking on freelance projects, starting a blog, or offering online tutoring.
  3. RESET YOUR FINANCIAL OBJECTIVES
    The coronavirus outbreak has altered our view of money. We're finally learning the value of saving for a rainy day. Not only that, but as we move away from our consumer-driven lives, we are beginning to value wise spending. Saving for a trip abroad or a luxury car seems obsolete now that social distancing is the new norm.
    Although we can hope that our normal routines will resume soon, we must not lose sight of the fact that these times necessitate a re-evaluation of our financial objectives. We must prioritize wealth creation and consider spending money on truly valuable items. Purchasing health insurance is a clear example of a significant investment.
  4. REVISE YOUR SPENDING PLAN
    Your budgets, like your financial goals, must evolve. Recasting your budget will assist you in focusing on allocating your money to essential needs and thus controlling your expenses. A budget allows you to identify and eliminate unnecessary expenses from your monthly budget. The same logic can be used to cut back on necessary expenses.
    For example, if you spend a significant portion of your salary on groceries, you should consider shopping at a discount store. Thus, budgeting assists you in fine-tuning your expenses and making wise spending decisions.
  5. REBALANCE YOUR INVESTMENT PORTFOLIO
    When you reassess your financial goals, budget, and risk tolerance, you may need to rebalance your investment portfolio. When goals shift, so do the investments that support them. You may be concentrating your portfolio on equities, but as your financial situation changes, you may find the need to increase your debt exposure.
    Because of a variety of factors, each of us is experiencing a financial setback. As we grapple with the constraints imposed by the pandemic, effective wealth management has taken precedence over everything else.

 

Conclusion

Wealth Management is an important aspect that we often ignore. It is important both on a professional as well as personal level. While big companies hire wealth management firms and experts to manage their finances, our daily life expenditure can surely be tackled by us. Follow the R5 rule to make your lives easier.