Planning a Financial Recovery From Covid-19

The deserted streets, empty hotels and closed businesses have become a familiar sight in Bali and other places around the world that rely heavily on tourism for survival. Initially there was disbelief, then for a short time, hope that the pandemic would be short-lived. But soon reality set in and many despaired that this situation could go on forever. But now there is real hope that the nightmare is coming to end. For sure it is; it is just a matter of how soon. What has changed is the rapid production of highly successful vaccines in sufficient numbers in countries like the US and the UK to meet their entire populations. This means that more supplies can now be directed to countries like Indonesia which have lagged the more advanced nations.

Indonesia has been slow to start a vaccination programme but it is now well underway and accelerating. Given the challenge of geography and the spread of the population it will still take a while before sufficient people have been vaccinated to eradicate the disease but the journey has begun.

This means that everyone should be making their plans on how best to emerge from the pandemic and readjust to a world that is getting back to normal.

We can all learn from the experience

The pandemic has impacted people in many different ways. Some big companies have actually profited from the pandemic, in particular those that have provided essential services to populations in lockdowns and working from home. Examples would be home delivery services like Amazon, Internet providers like Google, entertainment services like Netflix, communication services like Apple, Samsung etc. Those who had the foresight to invest in the shares of any of these companies or funds that invest in them would have seen their values increase exponentially.

Although millions of people have lost their jobs throughout the world many more have been able to hold on to theirs, even if it has meant forced working from home. Without the ability to shop freely, go out to restaurants or take holidays they have been able to save a considerable amount of money. In fact, personal savings during the pandemic have amounted globally to the tune of billions of dollars.

This may be actually good news to an extent for those who lost their jobs and whose businesses have suffered since there is a huge amount of pent-up demand for goods, services and holiday travel to be satisfied. It may be hard to envisage right now, but this could translate into a renewed boom for Bali and other popular destinations in the next couple of years.

It’s not too soon to plan for the recovery!

As a prelude to the planning it would be well worth reviewing any mistakes of the past relating to either one’s work, profession or business. We would never learn if we didn’t make mistakes so it would be helpful to identify these before facing a pandemic-free world. Typical mistakes that might have made include:

  • Keeping inadequate cash reserves
  • Not having longer term financial investments that can be liquidated in an emergency if cash runs out
  • Investing in assets that are difficult to liquidate in a hurry or during an economic crisis (eg property other than one’s personal residence)
  • Borrowing too heavily
  • Choosing the wrong location for a business
  • Putting all or most eggs into one basket
  • Not developing alternative skills
  • Being personally under-insured (a pandemic is not a good time to have a personal emergency)

Identifying previous mistakes will help in developing future plans.

Points for consideration moving forward

Everyone will be faced with personal challenges in finding new work, restarting a closed business or starting a new one. A glance at the list in the previous paragraph should give a few hints on what to avoid. But no matter how hard you try it is impossible to avoid all risks and this must be accepted as part of the deal if you wish to remain independent.

Be wary of high return investments

If you have been unemployed but find a new job when the pandemic ends then your priority may be to rebuild your savings. If these were heavily depleted you may be tempted to look for ways to replace them quickly. But great care must be taken not to be tempted by investments offering high returns. This includes legitimate ones such as daily traded shares, even the likes of Amazon or Apple that have made small fortunes for those who invested in them at the right time. They may well continue to prosper and I would recommend them to a long term investor, but for someone starting from scratch the risks of short term losses are too high. Best to build up cash reserves in boring bank accounts before taking on risk. Once adequate reserves are in place you can turn to investing again.

Another danger is that of investments offering ‘guaranteed’ returns of 10% per annum or more. These are often in the form of bonds or structured notes backed by building projects. The danger of them failing and your losing your capital are too high. Worse still are the many scams you will find on the Internet. Beware of cold calls. They are now illegal in many countries but they are impossible to control due to the ease today of making international calls. Literally thousands of people in the UK have lost their savings or pensions before and during this pandemic through succumbing to such calls. Many were fortunate in that they could claim compensation from an industry-sponsored lifeboat scheme but no such protection exists for expatriates overseas.

So where can you invest in complete safety?

The answer is that no investment is 100% safe. And that includes keeping money under the mattress! Banks are obviously very safe but even they can fail, although you will normally have government protection schemes up to a limit. But a bank deposit can hardly be called an investment as the effective interest rate is zero in USD or other major currencies. One of the accepted ‘safest’ havens is the US Treasury bond. That’s why even sovereign countries invest trillions of dollars in them. How much interest would you get? Right now you would get close to 1.5% per annum on a 10-year bond. You would get your money back at the end, guaranteed by the US government but there is no guarantee as to its purchasing power in ten years!

This is why we need to invest in the capital markets. There is short term risk to be sure, but history has shown they will maintain and often enhance the real value of your investment over the long term.

But right now many people are focused on the short term and how best to recover from a once-in-a-hundred-years’ pandemic event. It may take time but we will have all learned something from it.

Colin Bloodworth, Chartered Member of the Chartered Institute for Securities and Investment (UK), has spent over 20 years in Indonesia. He is based in Jakarta but visits Bali regularly in normal times! If you have any questions on this article or related topics or would like to receive a free monthly newsletter on financial matters you can contact him at 


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