Coronavirus: why not spending is the equivalent of investing
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No-one has any idea how long the nation will be in semi- or even permanent lockdown, so eliminating unnecessary outgoings will provide a welcome boost, says financial expert Peter Sharkey.
Spring mornings don’t come much better. The beautiful, clear blue sky was pale enough to remind walkers that a light wintry crispness hung in the air, though the vista ahead, featuring sturdy-looking evergreens surrounded by daffodils, suggested an imminent seasonal change.
My wife and I had opted for a much earlier morning walk than usual to ensure that ‘social distancing’ didn’t become a consideration, but we were fine; there was no-one to be seen for miles.
Ordinarily, such moments of solitude could be savoured, but it felt eerily quiet. Admittedly, it wasn’t yet 7.30am, but there was not a single person or car to be seen. We walked briskly through the wonderful country park on our doorstep for more than an hour, greeting perhaps four people en route; otherwise, chirruping birds and darting badgers were our sole companions.
By the time we reached the enormous wrought iron entrance gates, guarded by two equally large lions rampant atop the pillars supporting the gates, we expected to see a modicum of traffic; after all, it was Monday morning, but nothing. The road remained strangely quiet as we made our way home.
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Was everyone working from home, or enjoying their first few workless weekdays of the year by having a lie-in? I imagine it was a bit of both and expect it to remain like this for the next 2-3 weeks before the novelty wears off; what happens after that is anyone’s guess.
Presumably, however, there will come a point at which we must address what happens to the economy in the wake of an extraordinary shutdown of commercial activity and the transfer of an unlimited national wage liability from the private sector to the Treasury.
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The current situation is already much, much worse than the crisis of 2008. Then, the financial system imploded after someone calculated the scale of unrecoverable subprime mortgage debt at the heart of the US housing market could bring the system down. It very nearly did.
We know what the long term human and financial consequences of the 2008 crisis were, but what will the post-Covid-19 world look like?
Even thinking about the post-coronavirus implications can be a little scary, although there is one massive saving grace we should grasp as fiercely as a child’s comfort blanket: everyone, whether nations, governments or people, is in the same boat.
Unfortunately, the world is hardly awash with inspirational political leaders or thinkers, someone capable of outlining a new way of doing things to which most of us could subscribe: if the global economic clock is to be re-set, here, surely, is the opportunity.
Without getting too heavily into advocating fresh political and economic thinking, let’s first consider the basics. There is a very strong likelihood that once the virus crisis has passed (and it will), a huge number of people will find themselves burdened with more debt than they would prefer. It’s at this point they will realise that their Netflix streaming package, Spotify Prime and all of those other ‘working from home’ essentials must eventually be paid for.
Before getting to this stage, there’s plenty we can all do to protect our personal finances.
Investing in anything at the moment requires a strong stomach, but not spending could prove an excellent alternative. No-one has any idea how long the nation will be in semi- or even permanent lockdown, so eliminating unnecessary outgoings such as gym membership, or applying for refunds of expenses including rail season tickets and holidays you’ve paid for but can’t take will provide a welcome boost to your bank account.
If matters get particularly hairy, most mortgage lenders will offer a three-month repayment holiday; these are given at the bank’s discretion and are not automatic. Utility companies too are similarly amenable to temporarily suspending repayment of bills.
It’s also worth checking telephone and subscription television outgoings as you could discover you’re being charged for a service you never use. I did this earlier today and found that we’re paying BT £7 a month for ‘anytime’ calling. After 30-odd minutes on the phone, I concluded that trying to call them to remove this charge was pointless, so I visited their website. Big (frustrating) mistake. Suffice to say I’ve written to BT and advised them we no longer require the ‘call anytime’ service and saved £84 a year to boot. If you have a little more time than normal on your hands, I recommend you consider doing something similar.
TAM Asset Management Ltd offer savers the opportunity to invest their savings in Investment ISA portfolios comprising a variety of different funds pursuing long-term cautious, balanced or adventurous strategies. For further details, please visit the MoneyMapp website.
Please note: with investing, your capital is at risk.
For more financial advice, check out Peter Sharkey’s regular column, The Week In Numbers.