1 Diversify your portfolio

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Divide your money across financial instruments — bet it equity, debt, gold or deposits. "When equities crashed on March 24, those who had their life savings in equity were of course very unhappy but those who had diversified into debt or gold sailed through," says Minakshi Agrawal Todi, founder of education start-up The Finance Box who teaches at ISME School of Management and Entrepreneurship. She adds, that the crash also led many young people, who had put in their money in SIPs, to panic. "They immediately withdrew their funds before it fell more. But a big lesson to realise — especially when we're at an all-time high — is to not be scared of volatility, because you're not investing for the short-term but for your future," she states.

In fact, there's an upside to the crash, too. Todi explains this with an example. "The R5,000 you had invested when the market was at an all-time high, would buy you a lot more now. Hence those who continued with their SIPs throughout this year ended up purchasing units at a much lower cost, and will eventually fetch higher returns than those who stopped their SIPs."

The stock market crash had many glorifying bank deposits, but Todi points out that while they are not a bad alternative, it is important to note that young people can afford to take a little more risk. "Fixed deposits don't beat inflation — the speed at which you need your money to grow to be able to afford things in the future. If you put R100 in an FD that's currently paying 3.8 per cent, you're only getting R104 next year, which amounts to very little," she cautions.

With regards to equities, Haresh Desar, a city-based chartered accountant and financial consultant, quips, "Don't fall in love with a particular company because the company may not fall in love with you." He suggests going bullish on technology because it is time- and COVID-proof. "Always be ready to grab an opportunity. When the markets crashed, many regretted not having funds to invest in it. So, always have money ready to latch on to such opportunities," he adds.

Haresh Desar

2 Gauge liquidity

Niraj Bora, chartered accountant and founder, Surmount Business Advisors Private Limited, points out how liquidity of investments was critical when the news of the pandemic and subsequent lockdowns broke. Cash proved to be of the essence. "When it comes to investments, something that gives you higher returns — like equity – have a bit of illiquidity inbuilt in them. If you want liquidity, financial instruments like deposits, government bonds won't give you high returns. People generally move towards one end (of liquidity or illiquidity) but they need to strike a balance because with low returns you cannot beat inflation and illiquid investments won't be of use during a pandemic," he states.

3 Maintain an emergency fund

Todi asserts that an emergency fund that covers at least three to six months of expenses is vital. But along with that, Desar also mentions the need for businesses to maintain a technology upgradation fund. "There was a huge reliance on technology and cloud systems are prone to cyber attacks. Although the amount can vary from business to business, if you have surplus, I would recommend setting aside at least two to three per cent of it dedicated to technology," he advises.

Minakshi Agrawal Todi and Niraj Bora

4 Plan a pivot

Desar believes that a side hustle can be a saviour. Turn your hobby into a business, he says, with an example from his personal life: "I know a stockbroker, who because of some bad trade, was affected when the pandemic surfaced. But he started teaching the piano to supplement his day income." Another example, Bora shares, is how gyms started delivering fitness services online. "In the pre-COVID era, you had a set thought process to do your business; you never thought of alternatives. Now, an alternative revenue source is essential," he maintains.

5 Cash management over growth

It is important to make peace with the fact that if you're an entrepreneur, your business may not flourish in a pandemic. What is essential is that you survive. And that is why, according to Bora, cash management or runway management, as it is called in start-up language, needs to be kept in mind. "Typically, when your business is growing, you spend more. But when growth declines in light of a pandemic, there is a dip in revenue so you focus on cost reductions because growth is not an option until you pivot," he says.

6 Save more, borrow less

Saving is much easier than one thinks it is — if you focus on what your needs are and ignore your wants or find cheaper alternatives. "The rule of thumb is a '50-30-20' proportion: 50 per cent of your money goes towards essentials, 30 per cent is for your wants, and 20 per cent is your savings. Post-COVID, I'm seeing a re-balance occurring between the 30 per cent and 20 per cent i.e. people are saving more because they are also going out less often," Todi shares. Plus, Desar adds that one shouldn't go all in when borrowing. "Eat only what you can chew. Suppose you earn R1 lakh per month. In a city like Mumbai, you'll need at least R30,000 to survive so don't opt for EMIs where you need to shell out over Rs 70,000."