How to spend, what to save: your money questions answered

Financial adviser Jason Cook answers your questions on credit cards, investments, bills and more in light of the coronavirus pandemic

How to spend, what to save: your money questions answered

Last week, we asked our social media followers what they wanted to know about how to manage their finances during the coronavirus pandemic. From using credit cards to making investments, Dubai-based financial adviser Jason Cook answers some of the most popular queries we received.

What can I request from my bank right now that will make life easier for me?
The banks and regulators responded really fast and made a number of options open to individuals and commercial account holders. If you have debt then contact your bank to understand how they can help. Be prepared to evidence your income has changed directly because of the quarantine.

If I’m struggling to pay my bills, is it better to put them on a credit card or take out a loan?
If you need to take on debt look for the most flexible option with the lowest interest rate. Credit cards usually have a higher interest rate than a loan but this is not always the case. In the first instance you should contact your bill provider and ask them if they are able to defer or reduce the payment.

I have some savings. Should I dip into these to pay bills in the short term, so I’m not using credit cards or taking out a loan?
This is certainly the moment to use rainy day money. If you were fortunate enough to have an emergency fund available then it should be used now. This may mean you will not have to take on debt or even worse break into long term investments or saving plans. Once you have weathered this storm, save three months of expenditure and keep it in an instantly accessible deposit account for moments of uncertainty like this.

Should I consider using credit cards differently in the current climate?
In the current climate where most of us are working from home, many of us will be spending more money online. We should only ever use a credit card for online purchases. This is because if you are subject to online fraud the fraudster will be spending the bank’s money and not yours, thus the bank is far more likely to act in your favour. It has been my experience that here in the UAE the banks take anywhere between one to three months to resolve fraudulent transactions, which could be extremely stressful if the fraudster has taken money directly from your bank account using your debit card details. Never use your debit online unless absolutely necessary.

Markets are down globally at the moment, is now the time to invest?
A seasoned investor knows as long as there is opportunity to make money, the time to invest is always now. If you are a rookie it’s important to understand my rules of financial stability before you start, but if you know what to do, if you have the right plan set up, you can make a lot of money from this uncertainty. Don’t be fooled by doom-mongers predicting the end of the world. Markets make money in all directions. If the markets is not for you, there are alternative investments which are uncorrelated to the markets, and offer much less risk, so do your research.

Where’s the safest place to hold my money?
Hold the bulk of your assets offshore in a stable jurisdiction. Switzerland is my choice. You don’t have to be a millionaire to have an offshore account nowadays.

Why is long-term investing better than short-term?
This is not always true. Many people have made fortunes overnight, it really depends on the opportunity you are presented with. If you are considering conventional asset classes like, equity it is true that over a long period of time gains are proven to outpace risk-free assets like cash. This can simply be put down to people getting out of bed and going to work, or in other words economic growth. The skill is finding where the growth is to really boost your net worth.

What currency should I be saving in? Does this matter?
Save three months’ expenditure in your local currency and the rest in US dollars offshore. If your home country currency is different to the US dollar be sure to seek guidance from a professional, (not a salesman or a broker) to get the best advice when converting your currency.

With interest rates being so low, is buying a property with a mortgage a good idea?
Yes, and you can make a lot of money if you make the right investment, especially if you find a bargain. However, I have seen far too many people jump into property investments and when times like this arise they are unable to weather the storm and end up losing out. So take advantage of the low rates, just don’t over-stretch yourself, and favour the certainty of a fixed rate mortgage. Before entering any investment be sure that your finances are stable first.

Jason Cook is a chartered financial adviser and regional director for a US-based investment manager. Find out more at www.hedgeact.com.

The content of this feature is provided for information purposes only. The views expressed in this feature are not necessarily those of the publisher or its employees. The information is not intended to be and does not constitute financial advice, is general in nature and not specific to you. Before making an investment decision, you should seek the advice of a number of experts and undertake your own due diligence. You are responsible for your own financial research and financial decisions.

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