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In times of COVID, building financial hygiene and immunity

As investment values decline across board, there is also merit in taking the right precautions towards protecting your finances through financial hygiene and building your portfolio immunity. In fact, these measures should become a natural part of your financial planning process.

A fever of a new kind has literally gripped the global financial markets. The Coronavirus outbreak has injected fear in investors minds be it in developed markets or emerging markets. Is the fear justified? Will global trade and supply chain collapse? The tools to answer these questions aren’t so readily available.

What we do know is that there is merit in taking precautions to protect yourself from catching the virus. The two most important measures are maintaining personal hygiene and focusing on habits that build immunity. As investment values decline across board, there is also merit in taking the right precautions towards protecting your finances through financial hygiene and building your portfolio immunity. In fact, these measures should become a natural part of your financial planning process. 

One of the most important hygiene factors is to ask the right questions and be financially aware. Don’t make your financial decisions based on what others are doing. Question the seller and the logic of a financial choice. 

Financial Hygiene

The number one action towards hygiene in your financial life is saving. It's simple, don’t spend everything you earn. Start with saving small amounts and keep adding to this. It's important because, you will not be earning for your entire life; savings will help you manage expenses in the years when you don’t earn anything. Secondly, savings help you tide over tough periods in your earning days too, plus it helps in times of emergencies and for indulgences. 

If you are saving regularly, then don’t just keep money in the bank, invest it wisely so that it grows and you can create wealth over time. Another important aspect of financial hygiene is avoiding debt; staying away from big loans will help you have a better standard of living and quality of life. 

One of the most important hygiene factors is to ask the right questions and be financially aware. Don’t make your financial decisions based on what others are doing. Question the seller and the logic of a financial choice. 

The actions above relate to basic financial hygiene; the more to delve on the matter the more you will do to keep financial planning neat and clean. 

Financial Immunity

This is somewhat harder to achieve and just like good immunity in health, it takes longer to get to a point of financial immunity. To build this immunity you need to start investing early as that will help you create a financial cushion early in life. 

When you have accumulated wealth thanks to early investing you will be able to make financial decisions on spending, investing and your job choices in a much more secure manner. In other words, good financial immunity will help you take more calculated risks and the earlier you build this in life, the better off you will be when you get older and have larger financial responsibilities.

Another important aspect of financial immunity is understanding the balance of risk and return. If you want to create wealth and grow your money, you will have to take some risks. But how much is enough? This can be tackled with the help of suitable asset allocation and diversification to protect the downside or probability of loss in your portfolio. By starting early and having a balanced portfolio of investments you can build the much-needed financial immunity in your life. 

Your financial well being is important in times of outbreaks when markets catch the fever, because you know you have a cushion to ride through the bad times and also your hygiene habits will stop you from being reckless in difficult times. 

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