We know you have questions about the ongoing coronavirus pandemic and we’re working to get you the answers, straight from the most trusted sources.
Personal finance educator Kelley Keehn answered your financial questions as they relate to the COVID-19 pandemic in a LIVE video interview on our Facebook page as well as here on our website.
Here are a few questions Keehn addressed:
(Questions were moderated and have been edited for grammar, punctuation and clarity)
Q: If someone still has a job, what should they do now to financially prepare themselves for possible layoffs?
A: In times of crisis like this, if you don’t know if you’re going to have a job next week or next month, you’ve got to do an inventory of all of the things you have to pay out in a month — not just your debts, but all your bills and outgoing expenses.
Write down in a chart or a spreadsheet so that you don’t forget or miss anything, all the things you have to pay over the next three months.
If you’re still working but are a little worried, create another column and figure out what payments you can defer if you have to and then get on the phone with your bank. You can also book an appointment online with your bank, for them to call you back at a set time.
Currently, banks understand that millions of people are going through the same uncertainty or are in crisis mode. So they are really willing to work with you more so than ever before.
So have a conversation with them and if you’ve got credit card debt or you’ve got a mortgage things of that sort, see what can be worked out.
The Canadian bankers association has said that 90 to 95 per cent of the time when people are reaching out to their bank, they are giving them a deferral.
If you have credit a credit card balance especially if it’s a high interest rate credit card — and this is for everyone — make sure you contact your bank and get a deferral on your credit card, even if you don’t need it. Because if you’re at 20 percent, they’ll likely cut it in half – but only if you get a formal deferral.
The caveat is you want to still keep making your payments, but why not take advantage of getting that credit card interest rate cut in half for the next three months now.
After taking inventory of everything and contacting your bank, you then want to see who else is going to work with you like different utilities or property taxes.
So you want to educate yourself about all the government benefits out there and if you should need them start to make little ticks against what you can defer.You want to also put a little reminder in your calendar for all the important dates if you’ve made deferrals because you don’t want to forget about them.
Lastly, if you think that you you’re safe now, but you might not be in a week or two, don’t wait to make the deferral. If your mortgage is coming up or your credit card payment is coming up, it’s going to take about five business days for that deferral to kick in. So you don’t want to be calling two days before.
It can be really hard for people who have never had to look their finances head on like this, to have conversations with their employer, landlord or their bank. But, knowing your options is going to give you such a sigh of relief after you’ve organized everything and put in it your calendars.
Q: Is this an opportune time to play the stock market? And what would you advise for first time, DIY investors?
A: For first time DIY investors, you’ve really got to know what you’re doing, because otherwise it’s just gambling, right?
Professionals are professionals for a reason, because they do it every single day and it’s not easy.
Trading individually can be very hard, but I don’t want to discourage you from experiencing some investing with your money.
Maybe you do the Warren Buffet strategy where 80 to 90 per cent of it is prudently invested and you’re with a professional. But you maybe have interest and knowledge in some sector — there’s nothing wrong with taking 1 per cent or 10 percent and investing in that yourself — as long as that’s not going to make or break your retirement if you lose it all.
If you’re really going to go all in by yourself, you can open up a direct investing account with your bank. Most banks have the brokerage arm where you can start to play around and it may be a great way to get your feet wet.
In terms of whether or not to invest in the current economic climate – I think there’s always a great case to dollar-cost-average in no matter what.
So if you took say $1,200 and wanted to invest it today — it may or may not be the right day. But a more prudent strategy would be to take that money and instead of investing the entire lump sum today, you invest a hundred dollars on the first of every single month over the next year.
So at the end of the year, the strategy is that the average of that $1,200 is going to benefit you more so than trying to just pick the one day of the year to throw that lump sum into the market. So if can do that, you’re spreading out your risk and potentially even increasing your return because you’re not trying to time the market.
So if you’re dollar-cost-averaging in every single month, it’s always a case that you’re better to be invested than not have any investments.
If you have a prudent strategy like that, as long as what you’re investing meets your risk tolerance, then now is as good as the time as any to invest.
Watch the full interview with web writer Dilshad Burman in conversation with Kelley Keehn in the video above.
Scroll through the questions submitted to this session below.
Note: questions were moderated before appearing in the chat window