This covid-19 pandemic has hit the world economy in the most unprecedented way. We saw lockdowns imposed by governments worldwide, due to which businesses have suffered. This has impacted many of us in terms of pay cuts and job losses. In such a scenario, it's obvious for investing to take the backseat.
Consider a regular Indian household of Mr Mehta, who was a senior manager at Fast & Fury automotive dealership. He was laid off due to a sudden plunge in the demand for vehicles during the lockdown. However, Mrs Mehta works as a senior developer at an IT firm and has been fortunate to keep working from home. Though Mr Mehta's loss of income might be a huge setback for the family, Mrs Mehta's income has allowed them to take care of the needs of their family, which includes their two young daughters.
While the Mehtas have been able to somehow get by, there could be cases where the sole breadwinner has lost his job or suffered pay cuts. Such people may also have children or old parents, who depend on them. This makes them feel a greater impact of the financial hardship. It's only natural for them to stop investing and divert all resources to sustenance.
What to do?
We have always maintained that before starting with any kind of investing, one should always take care of the high-impact contingencies through life and health insurance and a sufficient emergency corpus that can take care of your expenses of up to a year. If you don't already have sufficient insurance or emergency corpus, it's time to get serious about that.
If you are already in a situation where you have faced a job loss or pay cut, first take a good hard look at your expenses and try to reduce them before you suspend your investments. Understand the difference between a need and a want and try to cut spending on the wants. This may allow you to continue investing and not derail your long-term goals due to this short-term hiccup.
However, if it's too difficult for you to manage your expenses while investing, by all means consider reducing or stopping your SIPs. Start them again when normalcy is restored or when you find another job.