During this Covid time many were asking about the need to change the investment strategy or for any new one to follow which can help to secure their investments. While IMO,  rather than changing the investing strategy, What one should do is- to keep a long term view and not get fearful or panic.

When one starts their investing journey and make a strategy then he/she should also consider situation like market fall/correction, economic changes, changes in rate of returns including some unexpected events.  That what the purpose of making an investment strategy- to stay prepared against the bad financial situation.

Investors should focus more on long term planning, being regular with their investments and ensuring that their portfolio is well diversified. Also, one should make sure to cover enough in health insurance and emergency fund before making any investment.

But apart from Covid, there are some reasons or situations which demands to change your investment strategy. The reasons which makes it necessary to to bring changes to the investment strategy are:-

-Change in salary/income:– Due to current covid situation, many losing their jobs, many facing the pay cuts which has largely impacted the regular income source of people. During such time making changes in the investment strategy is required as this could impact the ability of investor to save and invest. Other than covid, there could be chances of losing job, disability, change in job/profession etc. which may demand to make changes in one’s investment strategy. The change required at this stage is to keep more liquid money and keep enough in emergency fund in order to survive for some time period.

-Change in risk capacity:- If anyone loses  job or if their salary gets impacted then the ability of taking risk could also change. Change in risk capacity shifts with the variations in income, age, previous investing experiences, knowledge about personal finance and preferences.

-Change in age:- As per age, risk taking ability also changes. Younger people could afford to take more risk as they have enough time available with them to rectify the mistakes while retirees cant take much risk due to limited income source, money safety preference etc. Also,  investment strategy need to change due to factors like age, life changes, responsibilities, income source stability etc.

-Change in life stages:- Investment strategy needs changes as per the life stages of a person. For example a person approaching his 40’s need to make some changes in his asset allocation due to changes in his dependents, income etc. When a person starts investing during age of 20–30, he can take more risk by investing in equity or equity instruments due to age, low dependents, less responsibilities etc. While with increase in age, many changes are bound to happen like responsibilities increases, person gets settled in a job/company, there are no frequent hops in career etc. During this time a good balance of equity and debt is necessary.

Above are few important reasons which require to make changes in your portfolio. Few other reasons may be- unexpected need of large money, long term health issues/illness, no portfolio diversification etc.

If there is no solid reason to make changes in your investment strategy then it’s always always better to stick to your original investment plan. This might sound weird or boring but making any strategy just for covid time may disturb and harm your investments and future goals. But one can take few steps in order to protect investment portfolio and to live comfortably during this time:-

-Keeping enough in emergency fund, health insurance.

-Reviewing and rebalancing

-Adding hedge instruments like gold to portfolio to minimize risk

-Being regular with investments

Your investment strategy should make you comfortable and confident than to worry during covid times or even during market fall.

Note:- Above article based on one of my Quora Answer.