Time To Turn Wounds Into Wisdom

Ensuring long-term goals can help you remain unaffected during pandemic coronavirus

- Anagh Pal

We are well aware of the idiom, what happens in Vegas, stays in Vegas. However, analysing the situation we are in present times, this phrase has been completely subverted. What started off as an infection in the city of Wuhan, China has now spread its tentacles all over the world. By last week of March, more than 6.25 lakh individuals were affected and over 29,000 had succumbed to the deadly coronavirus.

Needless to say, global economy has been badly affected and India is no exception.

Markets have remained volatile and with BSE Sensex witnessing some of the biggest falls in recent times. “With several countries (including India) suspending human and economic activities and ordering lockdown, the coronavirus is all set to impact the real economies negatively in terms of reduced demand and growth, translate into lower expected earnings growth for companies and therefore lower expected returns from equities in the near-to-medium term,” says Unmesh Kulkarni, MD, Julius Baer India, a wealth advisory firm.

This implies that your long-term financial planning – be it securing a retired life or financing your child’s higher education, is likely to be affected, with most of us seeing a significant erosion on our portfolios.

Kulkarni feels this may become relevant to investors particularly if the damage to the economy is pronounced and it takes longer for the demand and growth environment to revive. Accordingly, investors with meaningful weightage to equities in their portfolio and witnessing erosion in their portfolio value, will be required to reduce their expected returns in the near-medium- term, which could affect the growth of their portfolio.