The COVID 19 pandemic has aggravated difficulties in every sector, with workers having to take PTO (paid time off) if they have caught the virus, some, unfortunately, do not have this luxury and may be furloughed instead, causing their savings to deplenish as they are having to dive into them so they aren’t stuck with unpaid bills due to being out of work. With mounting concerns and extended lockdowns, the world is experiencing one of the biggest economic crashes. The Market volatility emerged as a result of COVID 19 has wreaked havoc on the financial stability of investors too. Investors are searching for safe havens to save their money. The repercussions emerged are serious, which made the stock market’s plunge. However, there are risks involved in every type of savings and investments. Hence it is important to know the impact of corona on the savings of people and the ways to deal with it.
The effect of pandemic
The COVID 19 pandemic has created a health emergency and a financial crisis too. With the pandemic lockdown, equities fell, the stock market plunged, and the scaling economic fears threw the investors into a long-standing dilemma. The looming ambiguities due to the pandemic has also made the investors think about withdrawing money from your savings accounts in banks and store it at home. As the RBI slashed the reverse repo rates, most of the banks lowered the savings account interest rates, which again stood as a challenge for the customers. The equity markets have also been trounced and provided negative returns for the investors during fiscal 2020. Furthermore, stocks had turned volatile with the economic crisis, and selling them has become risky. The interest income from FDs has also fell further as the RBI has cut the repo rate. This move can also largely affect the income of senior citizens who depend on their FDs for earnings.
What should you do with the savings?
The RBI has announced a slew of measures to provide relief to the panic-stricken people. Furthermore, this is not the time to panic but act accordingly. If you want to open a bank account in these uncertain times, banks are offering digital tools for the savings and transactions. With internet/mobile banking, an online account opening is not a strenuous task like before. It is further important to keep saving more during these uncertain times. Try to have three to six months’ worth of living expenses ready in your savings accounts to meet any possible emergencies. Focus on the long-term goals, rather than trying to shift goals based on the current scenario.
Additionally, you can sustain your funds in the high-yield savings account as it can provide you with a higher bank savings interest rate. Your funds in the banks are relatively safe. Some banks even allow you to automatically sweep the parking money in FDs to savings accounts when there are debits in your savings account. This can provide you immediate access to the funds during emergencies, with a higher rate of interest.