The coronavirus pandemic is spreading fear around the world, and while countries are doing everything they can to stop COVID-19 in its tracks with travel bans and lockdowns, the financial markets are taking a hit. By now, it has become obvious that we are headed for another recession and the longer it takes to get control of the virus, the more intense the recession will get.

Therefore, it’s about time that we all do what we can to protect ourselves and our finances as much as we can. Luckily, there are several ways that you can adjust your portfolio to better protect it for the looming recession.

With the help of some financial analysts, we decided to evaluate and list seven of those methods.

1. Cash

Cash is one of the best and safest ways to store funds during a recession. It’s also a great method to ensure that you can buy stocks when the market turns or a great opportunity presents itself such as the plummeting of a usually stable stock that will likely bounce back.

Keep in mind that you don’t want to keep all your funds in cash and that you have to combine it with other traditional investments. You should also not expect to make any profits from your cash holdings.

2. Commodities

Commodities and especially gold are known as “safe havens” during global financial struggles. It’s well-known that many stock investors allocate their funds to gold when the stock market falls which, in turn, often results in the price of gold surging.

There are also good ETFs and other commodities that you can place your funds in as long as you analyse them properly. For example, during other recessions, oil has been a good investment but that is not the case this time around.

It’s well-known that many stock investors allocate their funds to gold when the stock market falls which, in turn, often results in the price of gold surging.

3. High-quality Bonds

Historically, high-quality bonds such as the U.S. Treasury bonds have been the best-performing assets during recessions. The reason for this is that bonds, similar to commodities, are considered “safe havens”.

Better yet, bonds tend to provide higher returns for investors than cash and even commodities.

4. Stable Stocks with Dividends

Not all stocks are affected the same way during a recession, and some tend to survive on their own without influence from the regular economic cycle. In fact, if we look back at the latest recessions, we can find stocks that have continued growing.

Furthermore, stable stocks with great dividends act as an additional safety net that gives you as an investor increase liquidity and the ability to continue investing and making a profit.

5. Preferred Stocks

Preferred stocks are a hybrid stock with equal parts equity and debt components which, when placed right, are some of the best types of investments during a financial collapse.

With that said, this can be a risky investment and you have to be very careful. Certain companies can look much better on paper than in real life making them even riskier than regular stock investments.

In addition, preferred stocks as best suited for smaller investments and investors with limited funds.

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6. Emerging Markets

Never lose sight of emerging markets and never stop prioritizing growth. Even during a major recession, there are usually certain markets that continue to thrive. In some cases, new markets start emerging because of the recession.

This often requires you looking for international investments and markets that you normally wouldn’t be analysing.

7. Diversification Is the Best Defence

Lastly, keep in mind that diversification is the best protection against a recession. Never keep all your eggs in one basket and try to spread your investments across several markets.

For example, most experts advise us to not place more than 5% of our funds in commodities unless we have a specific strategy, and preferred stocks shouldn’t make up a majority of anyone’s portfolio.

One Last Tip

Another method that should not be overlooked is short trading. By developing a solid strategy for how your best bet against the market, you can continue making great returns even as the market falls.

Now, most regular brokers allow you to short trade certain assets to a predetermined level but often start limiting the options when a recession starts. Therefore, we recommend that you look into short trading assets using online brokers.

Emergency Government Loans Appeal to Only Half of UK Business Owners

Following the UK government’s recent announcement of further measures to be taken to shore up businesses against the financial impact of COVID-19, business finance lender MarketFinance has canvassed the opinions of business leaders and found that more than two thirds (67%) do not believe that government funds will reach them in time and that they will run out of cash before the 12^th of April. Outlined in the press release below are the key results of MarketFinance’s research.

• Loans: Only half of businesses likely to take up government subsidised business loans
• Cash: Two-thirds of businesses have less than £50k cash and are likely to run out of money before Easter
• Revenues: 80% report falling revenues between 40-50% in March
• Time: 45% of owners believe it will take at least a year, if not two, for the business environment to normalise
• Crisis: 63% liken coronavirus pandemic to the global financial crisis in 2008

Loans

Only half (52%) of UK businesses are considering taking advantage of the Coronavirus Business Interruption Loan Scheme (CBILS which offers up to £5m, interest free for the first year, over 6 years) to shore up their businesses. Because most businesses (67%) have a pre-existing loan, their biggest concern (36%) is making repayments for any additional loan. Invoice finance (borrowing against invoices on completed work) ranked highest as an alternative to taking a loan, with 48% considering this option over the next 12 months, to avoid the addition debt burden.

Cash Flow

With revenue at companies across the country being hit hard, 80% reported a decrease this month of between 40-50%. They are seeking immediate measures to ease this pressure on cash flow. Business owners ranked a larger overdraft facility as first preference before seeking a business credit card and in third place, using invoice finance as a means to inject working capital into the business.

Anil Stocker, CEO at MarketFinance, commented: “Business owners are uncertain on revenue numbers for this year with a third expecting at least a 50% drop in sales and, rightly, weary of taking on more loans that they might not be able to pay back. It’s important to realise that in the fine print, many banks will ask for additional security and Personal Guarantees for loan amounts greater than £250,000 of borrowings.

“The number of businesses that believe they won’t make it to Easter has doubled from a third to two thirds despite the Treasury’s announcements. Time is of essence. It is imperative that businesses are made aware on how to access the measures they have announced but also to widen the range of finance options available to them”.

Advice

Most (35%) business owners are turning to their accountants for advice on what to do next before consulting their friends and family (21%). Only one in six are seeking advice from their bank manager on what to do. Business owners feel their accountants are the most accessible given the remote working environment.

Accountant Rashesh Joshi at Alexander Rosse commented: “The government headlines from last week covered numerous initiatives to be implemented such as the CBILS scheme, the job retention scheme and a new lending scheme facility for larger firms amongst a raft of other measures. The reality on the ground is unfortunately unlike the rapid spread of the COVID-19 virus.

“We have been in touch with a number of the accredited lenders and our colleagues at larger accounting practices. Feedback, information and practicalities of the application process and lending criteria are decisively in slow motion. It seems large institutions with all their resources had no contingency plans in place. We are aware of challenger banks and other businesses who could act quicker but have been frustratingly left out of the original process (but now invited) thereby losing further critical time as highlighted in MarketFinance’s research.”

Rashesh added: “We are partnering with our clients to help with their cashflow forecasts, rationale for the loan application, contingency plans, how they would cope with self-isolating staff and a whole raft of questions that the banks will ask before they will even consider lending. We are encouraging lenders to get with the reality on the ground which is frankly brutal. In our view the process needs to be simpler and quicker and bridging finance also made available to small to medium businesses".

Anil Stocker added: “Economies around the world are in a state of shock. In the UK, the government has poured billions in subsidies, grants and guaranteed loans for businesses, but nobody can be sure how well the rescue will work and how this money will be propagated around the small business community. It is critical that business owners have a prepared mindset for all scenarios. They will be heavily reliant on all their advisers – accountants, bankers and boards – to help them navigate the turbulence ahead.”

“The government needs to urgently implement and deploy their policy announcements. Business advisers will play a key role in guiding businesses on the best finance options for them. It’s imperative they are up to speed with all the necessary information and nuances of what is available”.

The arrival of COVID-19 or the coronavirus in the United States has been met by panic, with social distancing necessary, and remote working on the rise. However, for a lot of people in the US, this isn’t going to be possible. There are around 80 million jobs at risk during the pandemic, with a variety of industries struggling to adapt to the sudden change in business.

Businesses on the Brink of Collapse

The forecast for many companies across the country is bleak right now. Fewer customers are shopping and visiting businesses. In particular, several industries will struggle with coronavirus. This includes hospitality, travel, transportation and leisure.

Small businesses are at risk of going out of business. The conditions of COVID-19 have changed dramatically, especially for those running independent cafés, hair salons and even window cleaning services. With bills and expenses to pay, without having the usual influx of customers, some businesses will close their doors forever.

While Washington debates the creation of emergency relief packages, it’s important to investigate ways that you can survive financially without a stable job.

The conditions of COVID-19 have changed dramatically, especially for those running independent cafés, hair salons and even window cleaning services.

How to Prepare for Unemployment

Finding another job is going to be difficult during this time when most companies will be looking to scale down their workforce. Of course, this may be why you lose your job during COVID-19. However, there may be food stores and delivery companies looking to hire temporary workers to meet demand. This can be an option if you’re qualified and if you want to be on the frontline during the virus. Talk to your employer first to see what the situation is before jumping to conclusions. Then, weigh up your options and whether you can get a temporary job.

If you’re really struggling with bills and other expenses of running a household with children, you may want to consider Upgrade Loans. This is going to give you a cash injection during this difficult time that can keep you afloat until it all blows over. This can also avoid dipping into your savings and worrying that you’re going to run out of money to pay for essentials. If you’re a parent and your kids aren’t at school. It won’t be possible for you to get a temporary job. A loan can be a good way of combating this.

The federal government has permitted states to make adjustments to unemployment benefits in order to help citizens with the financial effects of coronavirus. Therefore, if your employer has told you that you won’t be able to work or they’re thinking about stopping operations due to the virus, you will be able to file for unemployment benefits. A lot of people won’t do this due to pride and not knowing how the system works. However, there’s no way to anticipate how long restrictions will last across the country. Payments can be for up to 25 days and this could be extended during the pandemic. It’s possible to apply online for unemployment benefits.

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Key Takeaways:

• Around 80 million jobs are at risk from coronavirus outbreak.
• Hospitality, travel, transportation and leisure jobs are particularly at risk.
• Emergency relief packages are in discussion in Washington.
• Look for temporary jobs.
• Consider a loan to cover your outgoings and normal expenses.
• Apply for unemployment benefits during the pandemic.

The Bank of England announced on Thursday that interest rates would be reduced to 0.1%, their lowest ever level, in an attempt to limit the economic damage of the ongoing coronavirus epidemic.

This latest cut to interest rates follows only a week after their reduction from 0.75% to 0.25%, and is accompanied by a raft of further emergency measures.

The Bank also announced its intention to increase its holdings of UK government and corporate bonds to £645 billion – an increase of £200 billion from its current holdings and a significant injection of money into the UK economy.

Dr Kerstin Braun, President of financing body Stenn Group, described the timing of these moves has come as a “a surprise”, as they follow only a week after Chancellor Rishi Sunak proposed a significant stimulus plan to shore up the UK economy, and three days after Andrew Bailey took over leadership of the Bank of England from its previous governor, Mark Carney.

“The Chancellor has only just announced a huge £330bn rescue package for businesses and it will be too soon to see any real effect”, Ms Braun said.

This sense of surprise has been shared by market observers. “Not since the Second World War have we seen so many emergency actions taken by the country’s leaders”, Paresh Raja, CEO of Market Financial Solutions commented.

The Bank of England’s statement acknowledged that the economic shock resulting from the coronavirus epidemic was likely to be “sharp and large”, but likely to be temporary.

“The Bank will issue further guidance to the market in due course,” the statement concluded.

The coronavirus pandemic is affecting every sector of the economy in a manner not witnessed since the 2008 financial crash. However, not every sector is equally vulnerable, and there are still plenty of reasons to be optimistic that UK property will remain a viable asset throughout this current global crisis. Despite the now-quashed hopes that a ‘housebuilding revolution’ would be well underway this year, the government is still showing that it understands the needs of property investors and that it will support them through these dire times.

Paresh Raja, CEO of Market Financial Solutions, outlines the implications for the UK property market.

The economic repercussions of COVID-19 have hit the UK at an interesting time for our sector. Although Brexit uncertainty led house prices to fluctuate throughout most of the last half-decade, the election of a majority government in December 2019 facilitated an impetus of new-found confidence in the market. This was reflected by the increase in UK property prices in January 2020 of 1.9%, which was seen as part of the ‘Boris Bounce’.

Alongside this, the shifting value of the pound also resulted in international investors capitalising on UK property as a result of their increased purchasing power. Mention of a future stamp duty surcharge for such buyers in the 2019 Conservative party manifesto led to further activity as individuals rushed to complete deals to avoid this potential added cost.

All of these factors contributed to market which was showing good signs of recovery – but has this growth been entirely stilted by COVID-19?

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Understanding the Resilient Nature of the Property Market

As it stands, not yet. Property deals that were scheduled to close in the last week have, for the most part, still gone through according to reports. From this, we can assume that we will not be witnessing a massive knee-jerk backing out of such purchases as a result of pandemic scare.

The question, then, becomes to want extent the industry will suffer due to the ‘social distancing’ measures installed by the government. House viewings, agent meetings, and contact signing all require a level of physical presence – so some fear a lack of ability to accomplish such face-to-face meetings will lessen sales completed, and therefore dampen the market resurgence many had hoped for.

In reality, property has shown remarkable resilience in the face of economic uncertainty before, and I am confident that it will continue to do so. During the global financial crisis, market activity did decrease but there were still over 898,000 UK property transactions in 2009, and 876,000 in 2010. Even when banks were adopting stringent lending practices, people still endeavoured to buy and sell property. This is also when demand for specialist finance providers began to rise significantly, with investors looking to take advantage of fast finance solutions.

In reality, property has shown remarkable resilience in the face of economic uncertainty before, and I am confident that it will continue to do so.

Putting COVID-19 in Context

The last two UK property corrections, namely the 2008 financial crisis and the early 90s recession, were both the result of purely financial pressures. One could argue a pandemic-related issue may not hit the markets as hard. This is of course a speculation and should not downplay the seriousness of the issue at hand.

Importantly, we are also seeing the industry adapt to these challenging conditions. The Financial Times reports that estate agents are already beginning to offer remote, online-only house viewings to prospective buyers to ensure there’s no delay in matching customers with their ideal home.

The government has also announced a three-month mortgage ‘holiday’ for those whose income has been affected by COVID-19, and interest rates are now at a record low of 0.25%. It is positive to see lenders also addressing the needs of their clients by offering online meetings and consultations, particularly in the bridging sector. It is this type of creative thinking and resilience that makes me confident that the UK property sector will be able to overcome the initial challenges posed by COVID-19.

Further to the Chancellor’s announcement regarding the mortgage industry’s support for homeowners who are experiencing financial issues due to COVID-19, lenders representing banks, building societies and other specialist lenders have come together to announce additional support for homeowners and residential landlords.

These include extending the option of a payment holiday of up to three months to residential buy-to-let landlords who have tenants who are experiencing issues with their finances, as either a direct or indirect result of Coronavirus, as well a three month moratorium on residential and buy-to-let possession action to start from 19 March 2020 helping provide customers with reassurance that they will not have their homes repossessed at this difficult time.

Commenting on the package of measures, Stephen Jones, UK Finance CEO, said:

“Monthly mortgage payments tend to be the largest outgoing for the vast majority of households and lenders want to reassure both homeowners and landlords who have tenants who may be affected financially that the industry is working hard to put measures in place to support them during these uncertain times.

“In addition to the industry’s support for residential homeowners, mortgage lenders are extending the same support to buy-to-let landlords who have tenants experiencing issues with their finances as a result of COVID-19 and the options include a payment holiday of up to three months.

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“For those customers already experiencing financial difficulty, lenders have also agreed a three-month moratorium on residential and buy-to-let possession action. The industry wants to reassure customers that they will not have their homes repossessed at this difficult time and therefore, these measures will start from tomorrow (19 March 2020).

“All customers who are concerned about their current financial situation should get in touch with their lender at the earliest possible opportunity to discuss if this is a suitable option for them.”

Robin Fieth, Chief Executive of the Building Societies Association (BSA) said:

"Building societies are acutely aware that this is a worrying time for those with a mortgage or who pay rent as both typically account for a significant proportion of household expenditure.  Now is a time for lenders to be flexible. The steps being taken by the industry today will offer some breathing space for those affected by the Covid-19 situation whether directly or indirectly.  The best first step advice remains to get in touch with your lender or landlord."