Your ultimate guide to weathering STORM CORONA

Money Mail explains what the virus panic means for pensions, savings, holidays, house prices — and weddings!

GLOBAL markets were plunged into chaos this week after their worst day since the financial crisis of 2008.

More than £150billion was wiped off the value of leading companies on what was dubbed the new ‘Black Monday’, raising concerns that we are heading towards a global recession. But while panicked traders speak of ‘utter carnage’, experts are calling on savers to grin and bear it.

Investments are long-term projects, and portfolios should be designed to ride out short-term shocks. Calculations for Money Mail show that even if you had invested £10,000 in the FTSE100 in June 2007, when markets were at their peak prior to the 2008 crash, your shares would still have a total return of £14,488 today.

Figures from investment platform AJ Bell also show that £10,000 invested in the FTSE 100 in 1985 would now be worth £156,547 if dividends were reinvested. This is despite the crash of 1987 and the 2008 financial crisis — whereas the same £10,000 left in savings accounts that paid the Bank of England base rate would now be worth just £54,733.

So could coronavirus cost you, and what should you do to mitigate your losses? Here, Money Mail talks you through everything you need to know.

IS IT TIME TO SELL, SELL, SELL?

DOn’T ‘lock in’ your losses. After the initial slump on Monday morning, the market clawed back some of its losses over the next 90 minutes. ‘If you’d simply not sold until you’d walked the dog, you would have lost less money,’ says Steve Webb, a partner at pensions consultant Lane Clark & Peacock.

Investors should be thinking in terms of five years or more. Tom Stevenson, investment director at Fidelity International, says: ‘When markets hit rocky waters, jumping in and out should be avoided, or you run the risk of missing out on unexpected opportunities that might arise from market corrections.’

now is a good time to assess your portfolio and take advantage of opportunities created following the virus outbreak.

Check that your portfolios are diversified. Include different assets such as property, cash and fixed interest across different sectors and regions as well as shares.

Laura Suter, personal finance analyst at investment firm AJ Bell, says it is also important to hold cash — although not too much. She says: ‘Cash leaves investors with scope to pick up bargains if they think stocks are being oversold. That said, money held in cash for the long term risks being eaten away by inflation.

‘Gold may also be an option to help diversify your portfolio, although the price has already rallied a lot. If you wanted to buy, options include a fund of precious metal miners, such as BlackRock Gold & General or the VanEck Vectors Gold Miners ETF, which tracks the price of gold.’

But don’t overdo it. no one knows what is going to happen and you will rack up fees if you make panicked, short-term changes to your portfolio.

Mr Stevenson recommends a drip-feed approach, where you invest small amounts regularly.

WILL IT AFFECT MY RETIREMENT?

TEn million people are enrolled in workplace pension schemes that have been hit by the crash. These tend to be defined contribution schemes and their value will fluctuate based on where the money is invested. But most will cover a range of assets and markets to mitigate risk.

Leading workplace pension funds have fallen by about 9 pc since February 20 but have held up better than the UK stockmarket, which fell by around 19 pc.

The value of defined benefit pensions, which are calculated based on your final salary, will not be affected by market turmoil.

Those approaching retirement will be hardest hit by a stock market fall, because their pots will have less time to recover.

But most plans start de-risking investments as you approach retirement age, which means your pension may have fallen less than you fear. Savers with old-style pensions may even have made money because they are largely invested in bonds, the value of which has risen.

Younger workers tend to have

more of their pension invested in shares, but they have decades to make up their losses.

this week’s crash is only likely to have reduced gains made in recent years.

Nathan Long, senior analyst at Hargreaves Lansdown, says: ‘this could actually be a good time to make a lump sum top-up and buy into the market at lower prices.’

Recent retirees using income drawdown will probably be hit worse than those farther down the line. that is because your pot is larger at the start of your retirement, before you start withdrawing money, so a stock market crash will take out a proportionately larger chunk at this stage. the best way to mitigate this is to limit your withdrawals until the market has had time to recover.

IF I CAN’T GO AWAY, WILL MY INSURER PAY UP?

IF YoU have booked to go away in the next few weeks or even months, experts recommend holding on to see what happens rather than cancelling.

Cancel and you risk losing money, even if you have insurance. this is because most policies won’t cover you for ‘disinclination’ to travel. If, on the other hand, the Foreign & Commonwealth office (FCo) later restricts travel to your destination, or your hotel is shut down because a staff member contracts the virus, you should be able to claim money lost on flights, hotels, transfers and excursions, if you have the right level of cover.

Be aware that not all policies include cover for travel disruption due to a change in FCo guidelines.

as long as your policy includes cancellation cover, you should also be able to claim if you cannot travel because you, or a family member, fall ill with coronavirus or are required to self-isolate. However, Brian Brown, of Defaqto, says some insurers could refuse to pay out if it’s an employer rather than a doctor who instructs you to self-isolate.

If you have not yet bought insurance, policies should still cover you for coronavirus disruption provided you don’t yet have the virus and are not intending to travel to a destination the government has advised against.

But as a rule of thumb, it is best to buy travel insurance the same day as you book your holiday.

those who have booked a package holiday and their flight is cancelled or the hotel is closed should contact the travel provider.

You may be offered the option of moving your trip to a different date or an alternative destination. If you are unhappy with the options provided, you can request a full refund.

If you don’t have insurance and your flight is cancelled following FCo advice, the airline should refund you or reroute you regardless. You will not be entitled to additional flight delay compensation.

If your hotel is closed or an excursion is cancelled, you should also get your money back.

But if there are any problems, you can also claim a refund under Section 75 of the Consumer Credit act if you paid by credit card, or request a chargeback if you used a debit card.

Should you be diagnosed with coronavirus before your trip, you must inform your insurer if it will affect your travel plans — they will need to check you are covered if you have to cancel later.

But if you are months away from travelling, experts say you don’t necessarily need to tell your insurer unless you think you won’t recover in time.

If you booked a flight or hotel using an air miles scheme and now need to cancel, you should get your points back under standard cancellation rules, according to Rob Burgess from air miles website HeadForPoints.

MORTGAGES AND HOUSE PRICES?

MoRtgage repayments have been suspended in Italy while the country recovers from coronavirus.

Here in the UK, the Royal Bank of Scotland, which owns NatWest and Ulster Bank, says customers hit by the disease could qualify for a threemonth break from payments.

other banks may also let you take a mortgage holiday if you are badly affected.

Lloyds Bank has also pledged support for those affected, including no fees for missed payments on credit cards, loans and mortgages, and payment holidays.

When it comes to the property market, the ‘Boris Bounce’ is likely to be punctured by the uncertainty.

Capital economics has already cut its UK price growth forecast for the year from 3 pc to 2 pc.

But stockmarket panic could lead to cheaper mortgages if it results in a cut in interest rates.

Investors predict the Bank of england will cut its base rate from 0.75pc to 0.25pc within weeks. this could make variable, or new fixedrate mortgages cheaper, but cash savers will probably get less return on their savings.

WHAT ABOUT UNI AND SCHOOL FEES?

It IS unclear what rights parents and students will have if coronavirus causes a school or university to shut down.

It is understood that each school’s policy is likely to depend on government advice as well as the context and circumstance of the closure.

there is no clear guidance on tuition fees either, but one university in Birmingham has already offered reassurances to this year’s international applicants.

aston University’s website states that these applicants will be able to get their deposits refunded if coronavirus prevents them attending the first day of their course and they have to defer.