As Government’s around the world do what they can to combat Coronavirus, the fragility of the global financial market has become an unsettlingly common topic of conversation.
More and more people are working from home, working reduced hours, or not working at all. So, it’s perfectly reasonable to feel a sense of anxiety when it comes to your financial situation. Whilst peoples’ health is, quite rightly, top of everyone’s agenda, it’s impossible to ignore the impact that Coronavirus is having on the economy, both here in the UK and worldwide. It’s affecting all of us, whether you’re a business owner, an employee, a retiree, or if you’re self-employed.
So, what should you be doing with your personal finances whilst all this is going on?
Here at Danbro Financial Planning (DFP), we’ve taken a look at some ‘dos’ and ‘don’ts’, to help you navigate the complexities caused by Coronavirus. But first, a quick word from our Director, Liam.
‘Financial health as important as ever’
Given the unprecedented situation we all find ourselves in, we wanted to give you some handy, practical, financial tips on things like pensions, investments, mortgages, and life and protection insurances.
Of course, it goes without saying that your health and wellbeing is the most important thing. And, to that end, I sincerely hope you and your families are well and aren’t finding the Government’s restrictions too rigorous.
That said, these are unfamiliar times for all of us, both socially and economically, so it’s as important as ever to keep a close eye on your financial health, particularly whilst this current situation is developing.
I hope you find our guidance useful.
Pensions & Investments
Given the international nature of this crisis, there are understandable concerns about a global recession, with business around the world slowing down. As most peoples’ pensions and investments are invested in company shares and bonds - pension, ISA and investment account valuations will likely have fallen in recent weeks.
Though this is never a pleasant experience, history tells us that, generally, the best thing for long term investors to do in these circumstances is “sit tight” and wait for the markets to recover. Historically, they do go on to recover, and sometimes quicker than you might expect.
A bit of a warning here; ‘selling out’ or ‘reducing risk’ can prove expensive if you miss any subsequent ‘upside’ moves in the markets. You’d then also have the other problem of when to go back into the markets. The general mantra here is that successful investing is about your ‘time in the markets’, NOT so much ‘timing the market’.
So, unless your longer term objectives have changed, which is entirely possible, then leaving your existing plan intact is often the best course of action. As a side note to that, some investors have actually been adding to their portfolios’ recently, looking to take long term advantage of the lower prices.
As you’ll probably have seen, one of the Government’s ‘flagship’ schemes to help people through this pandemic, has been the offer of three-month-long mortgage holidays on both residential and buy-to-let mortgages. As a matter of course, some mortgage products already allow payment holidays, so you may be able to utilise both options depending on your circumstances. The best advice is to speak to your lender. You can find more information on mortgage holidays, here.
Meanwhile, existing applications are currently progressing as normal.
However, it’s reasonable to expect underwriting conditions to tighten in the weeks ahead, particularly in higher risk occupations and for those who are self-employed.
So, if you’re on a variable rate or are coming to the end of a fixed rate deal, it’s advisable to consider your options. Switch to another deal with your existing lender or, indeed, re-mortgage to a new lender if a better deal is on offer. If you need assistance with this, please contact us.
And, of course, if you’re in financial difficulty, speak to your lender. They’re obligated to treat you fairly. That same advice is also applicable for those with unsecured credit, too.
Your home may be repossessed if you do not keep up repayment on your mortgage.
Life Assurance, Critical Illness Insurance & Income Protection Policies
When it comes to life assurance, critical illness insurance, and income protection, now is perhaps not the time to be cancelling your policies, for obvious reasons. You may have other outgoings that you can reduce/stop first if you are in difficulty or would like to reduce your outgoings.
If you have a valid claim due to Coronavirus, insurers will still look to pay out. Go to your respective insurer’s website for further details.
If you’re applying for a new policy, you can expect to be asked about any Coronavirus symptoms at application. Furthermore, if you do start to have some symptoms between filling in your application and the plan starting, you will need to advise your insurer. It might be the case that they simply defer your application until you are well again.
Also, if you’ve been considering whether to make/review Wills or Powers of Attorney, for example, many solicitors are offering remote solutions, so you don’t have to visit them in order to get things done.
Life Assurance plans typically have no cash in value at any time and cover will cease at the end of term. If premiums stop, then cover will lapse.
Danbro Financial Planning: Open For Business
Finally, we wanted to make it clear that DFP here for you in these troublesome times. We’re open for business and on hand to help.
So, if you have any queries, enquiries, or need any advice or assistance, please get in touch by email (firstname.lastname@example.org) or request a call back using the form below.
Liam Winstanley is a Chartered Financial Planner and Independent Financial Advisor. He has worked in financial services for well over two decades, specialising in wealth management and financial planning including things like pensions, investments, retirement planning, financial protection and estate plans.
Liam is the Director of Danbro Financial Planning and is passionate about delivering the very highest standards in service, ethics and professionalism within the financial sector.
Away from Danbro, Liam is an avid long-distance runner and also turns out for his local cricket side, Brinscall CC. He lives in Lancashire with his wife and son.