Coronavirus affected not only the health of thousands of people, but the entire economy: it plunged into recession. And while quarantine is not lifted and the business does not recover before the pre-crisis times, it is important for us to concentrate on our own financial situation.
So, how to behave competently during a pandemic? Advice to readers of “RG” was given by a member of the Central Bank Expert Group on financial literacy, the author of 11 books, financial adviser Natalya Smirnova.
If everything is completely bad
If you have lost your job, register as unemployed to receive the prescribed unemployment benefit. Now it is 19.5 thousand rubles a month. In parallel, look for earnings. It is clear that it will be difficult to find a job in your profession, especially if it is unrealistic to make it remote. But you can apply at least temporarily to the delivery service / remote call center, where you would have an income clearly higher than 19.5 thousand rubles a month to hold out during a pandemic, and then go to work by profession. If your income has fallen, but you are not unemployed, then – if your employment contract allows – you can also get a part-time job.
If you have loans, then with a significant drop in income (by 30 percent or more compared to the average income for 2019), you can apply for a loan vacation of up to 6 months. During this period, you will not repay both the main loan and interest (although interest will continue to accrue, and you will repay them at the end of the holidays in accordance with the new schedule). But for 6 months you can smooth out the situation and prevent delays.
If you have a lot of debts and you understand that you can’t pay it off, even if you sell the property and use all the savings, then there is another way – to file for bankruptcy. If the debt is between 50 and 700 thousand rubles, you can file an out-of-court bankruptcy, which is free of charge.
If you want confidence in the future
If you do not have a stalemate situation, but you are worried about your financial well-being, then the following rules should be followed.
Firstly, you should always maintain a “stash” for unforeseen expenses (keep it on deposit with the possibility of partial withdrawal and preferential termination), at least in the amount of three average monthly expenses, and even better – six. Everyone needs to have such an amount just in case, always, no matter if you have loans or not and who you work with. This is your insurance if you lose your job, if there are large unforeseen expenses, so you do not have to take a loan. If there is no such “stash”, you need to start creating it, putting aside at least 10 percent of income per month. This is better than nothing.
Secondly, it is important to protect yourself from key risks that can cause large unforeseen expenses, which the “nest egg” will not cope with. This is property loss, serious illness and / or long-term disability. That’s why you need to take out insurance – apartments, cars and, of course, life (from death for any reason, disability and dangerous diseases). Property insurance is necessary for the amount of at least a minimum repair, and life – for the amount of at least your annual income.
Thirdly, if repayments on loans exceed 40 percent of your monthly income and at the same time you have accumulations (in addition to the “nest egg”), it is better to at least partially repay your debts so that all repayments fit into 40 percent of monthly income. It is also necessary at least once a month on the sites sravni.ru and banki.ru to monitor the interest rate on loans of the same type as yours. And if rates fall below yours by at least 1.5 percent, refinance your loans by lowering payments on them. The situation is different if loan repayments are not burdensome for you (less than 40 percent of monthly income) and their rates are at the market level, and at the same time you have free savings. Then, you can early repay those debts for which the rate is so high that it is clearly unrealistic to kill them with investments with low and moderate risk (above 12 percent per annum in rubles). If you have a lower rate, then free funds can be invested, but more on that later.
As for spending, of course, you should not become Plyushkin. But still, during a crisis, it is better to try to answer the question before each purchase whether it is a vital necessity for you. A crisis is a period of instability, it is better to meet it with savings, rather than in debt. So large purchases (cars, sophisticated household appliances, etc.) should be bought now only if it is a vital necessity (for example, the old car broke down, the equipment is out of order, etc.). It makes no sense to be afraid of price increases: if there is no urgent need today, then buy everything in a year, when the situation normalizes. Remember 2014 when they bought three TV sets in December, and then they were sold on sites in January as unnecessary. Money is now the most valuable asset. But if you really need to buy, then the crisis is a good time for her, because sellers are willing to discounts due to a general drop in demand.
If you want to save and increase
If you, in addition to the “nest egg”, have savings, and you want to manage them wisely, then the answer to the question will help you choose the right strategy for the allocation of funds: are you ready for risk or not? And then choose one of the strategies.
First: categorically not ready for risks, not ready to even earn below a deposit.
A combination of an individual investment account (IIA) of type A (with a tax deduction of 13 percent of the invested amount) + FXMM (a stock exchange fund with a portfolio of US treasury bonds) may be suitable for such a person.
Let me remind you that since 2021, for all bonds, the coupon is taxed at 13 percent, which makes them less attractive. If you buy bonds within the FXMM fund, the coupon yield on them will not be subject to a 13 percent tax. Moreover, if you do not sell them following the results of the closure of the IIMS, but transfer them to a regular brokerage account and wait for three years of ownership, then you can avoid the growth tax due to the investment deduction on ownership of securities on the Russian market from 3 years. A deduction of IIA in type A will increase the yield of the fund and will allow it to be averaged out by about 11 percent per annum over 3 years, if we assume that the average yield of the fund is about 6 percent per annum.
Second: I’m only ready to risk not making money, but not losing.
Short structure products with 100% capital protection for a period of 3-6 months for growth of either the S & P500 index or the shares of certain largest companies in the US market may be suitable for such an investor. Now, for such products, the expected yield is 11-13 percent per annum in rubles, and the AIS type A will add a profit by deduction.
Third: ready for risk for the sake of the opportunity to earn significantly higher than the contribution.
I would offer such an investor the most diversified portfolio: invest up to 30 percent in money market exchange funds. The situation is now uncertain, in May there may well be another correction, so I can’t advise now to invest the entire amount right away, I would leave some in the money market for future purchases of bonds / shares.
The second 30 percent should be invested in exchange funds – on shares of American, Russian and Chinese companies, and all equally.
Another 30 percent can be invested in bond funds (government bonds of the Russian Federation, US Treasury bonds and corporate bonds of the Russian Federation, also equally).
And, finally, the remaining 10 percent – if active trade is desired – can be used for speculation, for example, at ruble-dollar exchange rates, for the purchase of gold or shares of individual companies. It is better to buy all funds on IIS to optimize taxes.
But whatever strategy you choose, you need to analyze it at least once a quarter and, if the situation changes dramatically, adjust it. Specialists of brokerage companies will help you with this, in which you will open your individual investment account.
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