With so many people dying every day, the biggest priority for anyone living in the UK should be keeping themselves and their families safe. As I write, we still haven’t reached the peak and the daily deaths being reported is sad, alarming and depressing.
Britons are also looking for help with their finances in record numbers as the coronavirus pandemic and the lock-down of the country sees huge numbers of people furloughed or made redundant, and 1.4 million people turning to Universal Credit. These certainly are worrying times and people are looking for answers to their burning questions. We looked at five of the most commonly asked financial questions, and our answers to them.
1: Should I move my stocks and shares investments onto Cash? Unfortunately, this is never a simple yes or no answer but dependent on your time horizon and attitude to risk. What is certain is that moving your money into cash after a market fall would crystallise your losses and give you little or no chance of getting your money back when the market returned. Only cash in your investments if you have no other choice. We all know that the stock market is no place for short term savings. If, however your investment is for the long term, such as retirement, the wisdom would be to stay invested until the world returned to normal and the market recovered.
2: Is this a good time to invest in the stock market? The FTSE, the UK’s market of stocks and shares is the lowest it has been for five years. This presents an opportunity for anyone lucky enough to have cash to invest for the long term. I’ll add the caveat that the market is extremely volatile – we have seen market swings up or down of up to 5% in a day! With such volatility, only the very bravest risk takers should consider investing short term funds. Assuming this pandemic doesn’t last forever, those looking to set aside money for the long term would be taking advantage of depressed stock prices and could see long term rewards as a result. Just be prepared for a very bumpy ride at the start of your journey.
3: Will taking a break from my mortgage or credit card repayments affect my credit? Credit reference agencies have confirmed that taking a repayment break should not affect your credit file if a) the payment break was pre-arranged with your lender or credit card company and b) if you were up to date with your repayments on your mortgage or loan at the time of applying for the break. The key is in arranging facilities before getting into trouble. If the payment break was for three months for example, and you needed more time, ensure you contact your lender before the three months break period was over. As with all credit, breaking whatever had been agreed would have negative consequences.
4: I’m struggling to pay my utility bills and council tax. Is there help available? If you’re struggling to pay your council tax, contact your council and discuss your options with them. With payments for a gas, electric or water bill, contact your supplier to let them know before you get into serious arrears. They’ll discuss your options with you. There are also other sources of help available such as grants and financial assistance schemes that could help you if you’re struggling to pay your energy bills. It’s important to contact your suppliers if you’re struggling, as gas, electricity and water bills are priority payments and your provider could cut your supply off.
5: What lessons can we learn from this? As a financial adviser, the first and most important lesson I have learned from this crisis is how important it is to have a rainy-day fund available. Rainy day money would mean a sum of money that could keep you and your family going for six months. Our “rainy day” is here. Let’s just hope it doesn’t last too long.