While the health crisis is at the heart of the concerns of all people, the economic crisis caused by the pandemic should become more significant in the weeks and months to come. The recession is here and the INSEE growth forecasts, or rather the decrease, are there to attest it, with an estimated quarterly evolution of the GDP in the second quarter of 2020, at -17%. Individuals will inevitably be affected.
What are the solutions to put in place to best face the crisis? Discover in this article 4 ways to prepare for the worst and to face the turbulences in the best conditions.
Have a well-stocked emergency fund
Because we are not immune in the current context of a loss of income, whether it is partial unemployment for employees or a deterioration in sales, fees or revenues for professionals and traders, or even a layoff, it is essential to be able to face this period with a well-filled emergency fund. Your precautionary savings should represent about 6 months of salary, the time to be able to receive the aid to which you may be entitled (unemployment, emergency fund, etc.) and to be able to bounce back.
It is recommended to hold these precautionary savings in an investment with guaranteed capital, such as a bankbook, for example, which allows you to recover the entire amount paid into the account at any time.
Diversify your assets as much as possible
In order not to be too violently impacted by the economic and financial crisis, it is better to make sure that your assets are well diversified and possibly review your asset allocation. You should be present in the money, real estate, equity and bond markets. You should also limit your positions in the riskiest assets, notably shares of companies belonging to sectors weakened by the containment and the pandemic.
Keep a long-term vision for your investments
However, be careful not to get rid of all your stocks by giving in to panic! Not all stocks are bad investments during a recession. Far from it! Even if you should adapt your investments to your appetite for risk, it is necessary to keep your cool and adopt a long-term vision for your assets. The recession is only temporary and assets that have been damaged during this period, if they have good fundamentals, should recover during the expansion period. What matters is the long-term value of your capital.
Educate yourself and get support for your investments
The investor would be well advised in these turbulent times to focus on training and support. Indeed, it would be judicious to take advantage of this crisis by developing one’s skills to optimize one’s portfolio while taking into account one’s aversion to risk. It also seems to us relevant in this troubled period to choose to be accompanied, for example by a wealth management consultant, who will be able to offer you the best solutions to enable you to increase the value of your capital over the long term by taking into account your investor profile.