The number of patients with coronavirus is growing every day, authorities in different countries announce quarantine and border closure. Analysts say it could cause a financial crisis. We asked experts to give advice on what to do in this situation with their finances.
Will There Be A New Financial Crisis? Maybe
One of the largest investors in the world, Warren Buffett, said coronavirus had already affected business. For example, his company Dairy Queens, which sells ice cream and fast food, closed part of its units in China, and there is almost no work in the remaining open ones. Buffett called the coronavirus a “scary thing.”
The prerequisites for the onset of the crisis are already seeing the head of operations in the foreign exchange and money market of Metallinvestbank Sergey Romanchuk. According to him, there has long been no global recession in the United States (a protracted decline in production and a slowdown in the economy), while technical indicators show that it is approaching. For example, the yield curve of US government bonds is straightened. And this means that the difference between the yield of long and short bonds is getting smaller. Previously, in similar circumstances, a recession began.
“This suggests that there are prerequisites for the crisis, and perhaps only a sufficiently powerful trigger shock is needed. A coronavirus pandemic can be such a shock if it develops, ”the expert notes. At the same time, he recalls: USA Routing Number “The nature of financial crises is such that it is very difficult to predict the time of their onset, even if the prerequisites are visible.”
The current economist of Alfa-Bank Natalia Orlova does not believe in the crisis under current conditions. She does not deny that the spread of the epidemic could put the risk of recession back on the agenda. But this will force the world central banks to carry out an additional easing of monetary policy (lowering the rates at which banks borrow money from the Central Bank. The lower they are, the cheaper loans for business for their development become). As long as the US Federal Reserve and other central banks are ready to support markets, the risk of a financial crisis does not seem significant.
Finam Group analyst Sergey Drozdov is also calm about the virus, who sees in this situation “a formal excuse for a legitimate correction in overheated stock markets”.
Should I Keep Money On Deposit? Yes, If There Are Any
According to Natalia Orlova, the situation with coronavirus should not affect the decision to open or close the contribution. An account must be opened when there is something to save.
An independent financial adviser, Natalya Smirnova, is incredulous about deposits. She believes that deposit rates are now at lows, so it’s wiser to open them only for nest egg. As an alternative tool with a higher yield, you can use federal loan bonds (for example, you can earn 7.1% per annum on OFZ 29009 ).
If you are still not ready to take risks in the stock market, then a contribution will be the best solution, says Sergey Romanchuk. The banking system is cleaned, so there should be no difficulties with the return of money in the event of a crisis. With the onset of the crisis, deposit rates can go up, but not significantly.
“It is reasonable to assume that approximately the current level of rates will remain,” the expert said.
Should I Take A Loan? Without Special Need It Is Better Not To Take
“Taking credit on the eve of the crisis is the worst thing to do. Now we need to take a loan only to those who really have a need for it and for whom loan repayments will amount to no more than 30% of the income, ”advises Natalya Smirnova.
Alfa-Bank also recommends taking a loan for specific tasks and with an understanding of how the money will be returned.
Financial adviser Vladimir Vereshchak advises borrowers, in anticipation of the crisis, to minimize the size of their debts – not to take new ones and repay old ones faster. In order to avoid problems with repayments on loans, TD Bank Routing Number you need to worry in advance about the “airbag” in which at least your income for one year should be. For example, with a salary of 50 thousand ₽, you need to save at least 600 thousand ₽. This money is best stored on a bank deposit. If you are suddenly fired in a crisis, then saving will help you through difficult times.
Should I Buy Stocks? Yes, It Can Be Profitable
Warren Buffett believes that coronavirus should not influence investor decisions. He will not sell his stock portfolio. Typically, a billionaire buys securities in order to hold them for 20 to 30 years. And his prognosis for this period due to coronavirus does not change. Of course, on cheaper stocks it will be possible to earn. “If you look at the current situation, you will get more for your money in stocks than in bonds,” says Warren Buffett.
But this option is suitable for those who are ready to invest money for at least two years. So, according to Natalya Smirnova, if there is a willingness to take risks and the investment period is from 2 to 3 years, then you can consider buying shares in those industries that sank most against the background of the virus – oil, gas, metallurgy.
The virus will benefit from shares in pharmaceutical companies, manufacturers of masks and other medical and paramedical equipment, said Sergey Romanchuk. But speculating in this situation is dangerous. “If you invest on a long horizon, then you should not twitch, although the correction of the market can be significant. But it’s not a fact that one can clearly guess with the moments of exit and entry, so you should not turn investments into speculation, ”he warns.
Should I buy dollars? Not anymore
All experts interviewed by Mybankdetail.com believe that buying a currency in a crisis is not worth it. The dollar has already grown appreciably against the ruble and will continue to grow if the crisis breaks out, Sergei Romanchuk explains. It’s worth buying dollars only if you need them in the long run. Buying currency for speculation is risky, he recalls.
Should I Buy Gold? You Can Buy During The Crisis
Since the beginning of December 2019, gold has risen in price by 12.5%. But, according to Natalya Smirnova, the purchase of gold makes sense, as long as tension remains due to the coronavirus. As soon as it goes into decline, it is better to sell gold.