By: René Olivier
The world has seen many crises before, and while each crisis is different in its own right, history has a tendency to teach us patterns that we can use as templates to assist us in successfully navigating through the storm.
Covid-19 has caught the world by surprise, and although there are still many unknowns, one thing is sure for most individuals, businesses and governments: it has created holes in income statements and balance sheets.
An income statement is a summary of all income and expenses providing a net income after tax. The hole on income statements is mainly due to loss or uncertainty of future income.
The balance sheet side is effectively the health of your total position (assets minus liabilities) at any given point.
Understanding these basic concepts provides a template on possible levers to pull:
- Income statement:
- Income
- The total size of the pie in the world will most probably not change that much in the medium term, but the difference will be who owns what part of the pie. Human nature has great ability to adapt over time and the entrepreneurial spirit of some will prove to be profitable during these trying times.
- Expenses
- This is probably where the most can be done in the short term.
- We are all being reminded again about what is critical and what is not, and we should all be determined to optimize where we can.
- IJG Wealth is an independent long-term insurance broker that provide risk planning solutions, without adding an additional layer of cost to the client. This provides us with an overview of the market and the ability to identify the most cost-effective solutions. There are many next-generation solutions where clients can save on their premiums without comprising on quality.
- Income
- Balance Sheets
- The strength of your balance sheet will determine how long you can survive. In other words, do you have enough buffers to get you through these uncertain times. If you have a money market account for example, ensure that you try to maintain your buffers as long as possible, and rather cut unnecessary expenses first.
- If you have more than sufficient buffers, current conditions provide fantastic opportunities for generating investment returns. IJG Wealth provides independent local and offshore solutions.
The journey will be difficult for some time still, but how you travel can make a big difference in whether your will reach your destination or not.
Contact IJG Wealth to see where we can assist you with financial planning in these trying times.