The world is gripped with two fears, one of falling prey to a virus that can make some of us seriously ill and the other of losing their wealth as capital markets across economies have crashed.

The outcome of fear around a contagion has led to businesses pulling down their shutters across the globe. It means large industries have stopped work, it means that your local shop is selling less and your local vendor is earning less.

You own business may be impacted by what has been identified as the only impactful solution to the virus contagion – social distancing. As a result of this, the global equity markets, which were already poised at peak valuations, are assuming earnings slowdown in the months to come which in turn has led to a sharp correction in stock prices.

Finally, this shows up as declining returns on your investment portfolio. As the fear spreads, it becomes a self-fulfilling reaction and breeds more fear. The more you are afraid the more your actions will move towards making the wrong choices.

Find your space

Before you get too afraid, take a step back and breathe. Yes, the virus is contagious and even dangerous for those who are already in ill health, but what’s more important to understand is that you can reduce the spread by taking basic precaution. Don’t gather in crowds, keep your self and surroundings clean and maintain very high personal hygiene. At the slightest sign of illness or symptoms, visit a test centre or a doctor for advice.

Once you are taking these precautions, panic has no role to play. Use the time you get because of all the lockdowns and work from home directives to focus on your future health and build your immunity by continuing your physical exercise, sleeping more and eating healthy food at home. Also, use this time to build a financial plan that will help you manage such uncertain times better.

Calm in your money life

Finding this calm in your money life may be harder given that jobs are at risk and long-term investment returns are falling fast. At the same time reacting now out of fear or panic can be harmful too.  This is why having a clear financial plan and investment strategy is a better idea at all times. In times of positive business and market environment, the importance of a strategy is underrated and often overlooked.

Use the time now to focus on your future financial plan rather than acting rashly around your current financial situation.

Here are three things you must do.

1. Don’t act on your current investments. This is not the right time to alter the asset allocation or your investment portfolio. It is a unique and extraordinary situation, only once the external environment has calmed down should you look at your own investment portfolio and think of actionable steps. Don’t open your investment account for now. The more you see the decline in returns, the more you will panic. However, just like you didn’t foresee this sharp fall, you will not be able to foresee the recovery. Stay calm and do nothing.

   Seeing the market fall you may feel that you are better off in fixed deposits, but keep in mind that corrections happen and so do recoveries. You don’t want to stop your wealth creation journey thanks to one sharp correction.

   If you need money, use what you have in short term investments and your emergency fund.

2. Have a plan in place. Going forward a reasonable strategy for managing your investments will be the key. If this level of sharp correction has thrown your daily expenses or financial goals maturing in the next year or two into turmoil then clearly you don’t have the ability to absorb this level of risk and perhaps need a lower allocation to equity going forward. A balanced portfolio or a mix of equity and fixed income that suits your risk tolerance level is a must. For that, you will have to reassess your investments and your allocation to various types of investment products. If you don’t have a plan, then start collecting your wits to make one. Without a plan, you are simply swimming with the tide and may get stuck where you don’t want to be.

3. Declutter and tighten the belt. This is as important in your financial life as it is in all other aspects of your life. Today we are inundated with information about everything. The quality of this information, however, has fallen to an abysmal low. You should not just socially distance yourself from others to contain the virus contagion, but also distance yourself from social media which is feeding you low-quality information. When it comes to your money and investing it, you don’t need ten different products. Pick 4/5/6 good quality ones which do the work for your long- and short-term investing.

In times of distress, buckle down. Spend less and save more. This will help you tide over the difficult periods. Remember nothing is permanent. Eventually, the virus spread will slow down long enough to give scientists time to find a specific vaccine and cure. People are recovering and will continue to do so and at the end of the day a positive cycle in global health, businesses and capital markets will return. Until then, keep it simple.

Undoubtedly, these are not only difficult times but confusing too. One has to use good sense and calm thinking to be able to make the right decisions in matters of health and wealth. Keep calm, take a step back, breathe and read this article once again.