The worst financial mistakes you can make during the coronavirus outbreak
Clive Eggers, the Head of Investments at GTC, shares the financial decisions people should avoid at this time.
It goes without saying that the coronavirus outbreak has had a negative impact on the economy of the world.
Many companies have been forced to stop operating and some people have lost their jobs.
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Many people are also worried about how the current climate will affect their investments.
We spoke to Clive Eggers, the Head of Investment at GTC, about the worst financial decisions people can make during this pandemic.
Clive says that although it is understandable that people are panicking, they should not make the mistake of acting out of fear.
“Financial decisions are not that different from any other decision you make in any area of your life and really, the worst decisions you can make in your life are ones where you make a decision based out of a very strong emotion like fear,” says the financial advisor.
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He says in most cases acting out of fear will lead to making the wrong decisions.
“If your motivation for making a financial decision is very strongly driven by fear, then it’s almost always going to be the wrong one,” he adds.
“The most obvious worst mistake people can make is by trying to pull the money out of the market out of fear because they are worried about how things are going.
“Obviously nobody knows the future and as we sit here today, you can’t say for sure the markets won’t fall more, but you have to base your decisions on reasoning, on sound judgement, actually go back to the reasons and the fundamentals of investing."
With so many people worried about how their investments will be affected, Clive says they should not withdraw their savings.
“It’s a bad time to be making withdrawals, and if you were already planning a withdrawal and you can afford to push it out, it would make sense to do that, because markets are very volatile,” he says.
“A classic mistake in an environment like this is to panic and then just say ‘let me just get my money out of the market’. History shows that that is almost always the wrong decision to make."
Clive advises that this might be the best time to invest with the right guidance from your financial advisor.
"It’s like anything in life, you look for a bargain. When you see something that you have had your eye on and it’s now on sale and it’s on a discount, it’s often a great time to buy. Same with the share market, the investment market. Things are at a discount. With a long term time horizon, it’s not a bad time to invest,” he says.
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“History shows that it’s often opportunities like this that end up being the best time and not the worst time. Even though you feel afraid about the future and you feel like it’s the wrong thing to do anything, because markets overreact to news like this, you’ve got shares and bonds and other instruments around the world that are trading at very low levels."
Clive adds that the governments of different countries of the world “have put a lot of money into saving companies, people and businesses around the world."
He says this gives the market and the investors hope and an expectation that things will recover.
“There is a lot of reason to remain confident that over a longer-term, it will recover,” he says.
When it comes to panic buying, Clive says people should stay away from it, because they are putting themselves at risk by being in the stores where there are a lot of people.
He says citizens must adhere to the President's advice and know that the government has made means to ensure we don't run out of food supply.
"We should be following his advice, but unfortunately people do act again out of fear. They rush out and think well let me just get my stuff now so that I don’t have to worry about it later. Obviously, if you can afford to wait, I think wait, because the government is serious about ensuring that there is stock available in the supermarkets and in the pharmacy, so we really don’t have to worry.
"The best way they say to fight the pandemic is to do social distancing. Panic buying and everybody going to the shops at the same time is the opposite of that because then you have everybody crowding into a shop. In fact, because we are supposed to be staying at home during the lockdown, having a reason to go out to the shops will give you a nice break from being stuck in the house," he concludes.
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