Updated: Feb 4
Pensions, Investments and Savings have been hit by the Corona Virus Pandemic. There have been some big losses and badly hit pensions and funds, some have lost up to 37% over the first weeks when the pandemic hit earlier in 2020. Here we share the impact of the Corona Virus on your pensions, investments and savings.
The impact on portfolios
Typical losses in portfolios have been around the 10-20% mark in the first 3 months of the pandemic in 2020 and across 12 months around the 5-10% mark. This was because there was some good growth before the losses which lessens the blow.
Remember these types of investments are all about the length of time you are in rather than trying to time markets. Pulling out of the funds you hold when values go down is not a good idea. Already we’ve seen about 50% of the losses come back. So if you had cashed out a few weeks ago you would have missed recovering 50% of the losses. When prices drop this provides a good opportunity for the fund managers to make money longer term. Things will still be volatile while the world adjusts to this new normal. You’ll see more losses when there’s bad news about death tolls and second peaks.
Confidence returns with news of a vaccine
However, you’ll see soaring confidence when there’s developments such as vaccinations or economies opening up for business again and funds will bounce back. Hold on to your hats investors.
If Cruze Financial Solutions hold your funds for you we are very comfortable where they are but do speak to us if you’re anxious.
If you are with another advisor then speak to them for reassurance. yourselves.
We recommend you read this article on The Seven Principe's of Investing
if you are worried about your pensions, stocks and shares ISAs or similar assets. It discusses investing in volatile times.
Property, Moving and New Mortgages
Lock down has made the buying and selling of properties very difficult. However, this is not a return of the 2008 credit crunch. Lenders still have money to lend and you can move within Covid Guidelines.
As staff began to work remotely lenders have retrained staff who weren’t usually checking mortgage cases and had to withdraw from cases such as those with small deposits or more complex issues as they carry higher risk. Another concern for lenders is that it’s very hard to prove who has been affected by the lock down financially and it’s taken them a while to develop systems and questions to make sure they are lending money to people who are sure their income is stable in the future. Lots to contend with! This is not a time to be approaching your own bank directly and hoping for the best if you need a mortgage. Each lender has vastly different views on the current situation and we strongly suggest that if you are looking for a mortgage at the moment or will be soon that you contact us to check the entire market for you. If you are on furlough you can still use the income for a mortgage which not many people realise.
Existing Mortgages, Mortgage Holidays and Fixed Deals
Most of the lenders have acted very responsibly and offered mortgage holidays that shouldn’t affect your credit or your ability to remortgage in the future.
Unfortunately, a few are saying that you cannot transfer to a new product while taking the mortgage holiday or that you cannot remortgage if you are having payment issues and require a holiday. Check with us to see how your lender views payment holidays.
Most lenders are offering the payment holiday via a straight forward website application with very few questions being asked.
Remember, it is just a payment holiday, the 3 months still need to be paid at some point and will be added to your mortgage debt with interest making the payment higher. The reality is for most people the payment will only be a few pounds higher if you have many many years left on your mortgage but it’s important you do understand the implications which we can talk through with you.
If your fixed deal ends during this time then the advice above around new mortgages still applies. It’s harder but use a broker and still check if you would save money (we often save clients a couple of thousand pounds by remortgaging instead of staying with the same lender and you should always check the whole market with a broker each time your fixed deal ends).
The silver lining in all of this is that mortgage rates are the lowest they can possibly be at the moment and if you are coming out of a fixed deal right now you could fix your mortgage for many years to come at an incredibly low rate. If your current situation means you can’t transfer then you can usually stay with the same lender and product transfer.
Budgeting and Cashflow
You are probably saving loads of money on travel, socialising and clothes but spending more in supermarket. This is a really good time to reset the budget.. A lot of companies do have some form of customer services available still so get on the phone and renegotiate your nonessential bills – sky, phone bills, wifi, utilities etc.
By calling them every year and threatening to cancel you usually get a reduced price if you are not tied in. Review any of those sneaky subscriptions Netflix, wine clubs or gym memberships and make sure you are still using them.
Generally just sense check your outgoings. This is the rainy day that everyone talks about and it’s a massive wake up call to get back to basics with finances. If your income has been affected then please, when you get back on your feet, save 3-6 months of back up money for times like these. If you’re one of the lucky ones who is able to work from home or maintain stable income then this is a great time to try to put aside a little bit and have that back up.
Aim to be able to pay your bills for 6 months without any income.
If you are self employed the rug could be pulled from under your feet at any time with no back up of sick pay or redundancy pay so it’s really important. If you don’t have any savings at all then start off with 1 month of back up money and see what you can build it up to! Rainy days do happen.
The Things We Don’t Like To Think About
No one likes to think about life insurance, illness insurance and will writing. It’s obvious that the current situation makes people think about the worst happening. If you haven’t written a will then I attach a document called rules of intestacy which shows you what would happen to your assets without a will. I
It’s also a much more complicated process for loved ones with a will.
During the pandemic we are to writing wills for frontline NHS staff for free. If you know anyone who needs help, please do pass on our details. For everyone else, as it’s such an awful time to think about it.
There is no charge for insurance advice so if you have been worrying about getting your life and illness insurance sorted we can see every provider’s prices .. A lot of insurance providers have been struggling to get policies active as they’ve obviously been inundated. We know the market well and we can talk through who can offer immediate cover vs who would need to do more checks like writing to your doctor etc which is obviously taking a long time at the moment.
Contact us with questions and concerns
I hope the above has been helpful and if you have any questions, concerns or comments please do contact me whether it’s about products I’ve helped you with in the past, policies and accounts you have already through someone else that you need help with or solutions you want to look at in the future. I’m genuinely happy to help with any aspects of your finances even if it’s just to answer a question or clear up something you’re confused about. I am signed off to be able to offer all the advice I normally see clients face to face about over the phone, face time or zoom and as I’m locked down myself I’m really flexible on days and times we can speak. I’m still very much open for business and very happy to assist! To remind you I can help with any of the following:
Writing your Will/Trusts/Funeral Plans
Lasting Power of Attorney
Life Insurance/Critical Illness Insurance/Income Protection Insurance/Buildings and Contents Insurance/Private Medical Cover/Landlord Insurance
Residential Mortgages/Buy To Let Mortgages/Commercial Mortgages including all the specialisms like Right To Buy/Help To Buy/Shared Ownership/Self Employed/Contractors/Bad Credit/Portfolio Landlords/HMOs and more
Equity Release/Retirement Mortgages/Over 55s Mortgages
Keep safe and do drop me a line if you’ve got a second to let me know how are you doing and if you’ve found this useful! We offer advice in all aspects of financial planning and I am a fully qualified mortgage advisor and independent financial advisor.