until May 15, the National Economic Development Authority warns of a continuing economic slowdown which is likely to cause worries for consumers and entrepreneurs even more.
 |
| Financial expert advises against withdrawing huge cash |
As many businesses remain closed and many employees remain jobless, there is a lot of pressure to hoard cash at home as a way to have a ready means to spend should emergencies happen.
But withdrawing huge cash from bank accounts is not really a good idea, according to registered financial planner Fitz Villafuerte.
“Fear is always the initial reaction when such events happen. And fear always translates to selling in the stock market because during these times, having cash is important. The massive selling results in the stock market value going down."
“And in this case of a pandemic when the whole world is affected, everything and not just the stock market is affected. All asset classes can go down,” he explained.
This panic reaction was exactly what happened on March 20th, when the Philippine Stock Market opened after a 2-day shutdown on trading. On that day the stock market lost some P1.6 trillion easily described by some traders as a “bloodbath”. It happened because people were afraid of the possible effects of the Covid-19 pandemic and started selling their stocks to generate cash on hand.
Resist temptation
According to Villafuerte, people should resist the urge to hoard cash. This is because it may create even worse financial risks.
“Keeping a huge amount of cash at home is riskier than we think. Yes, we feel more secure knowing the cash is within easy reach--but that’s a false sense of security. For example, the cash could easily be misplaced or worse, it could get stolen,” he said.
Furthermore, the attention and effort that people give to securing cash at home only adds to their anxiety and stress. “At this time, we really should be focusing on helping ourselves and our families stay safe and healthy. We don’t need to add keeping our cash safe to our worries,” Villafuerte said.
Having a lot of cash on hand might also disrupt household budgets and may cause them to spend more than what they need.
“With so much cash in hand, the temptation to spend is higher, especially if you don't have financial discipline. One friend of mine, for instance, regretted bringing a lot of cash during his last visit to the grocery store,” noted Villafuerte.
He added, “That’s because instead of buying only the necessities, he ended up buying several other items that, in retrospect, were unimportant and not of any use during the community quarantine.” As a result, said person ended up with less, not more, cash on hand.
Banks remain open
Villafuerte pointed out that banks continue to remain open during the ECQ and this means there’s ready access to cash, anyway. ATMs, mobile banking, and online banking are all in operation for various types of banking transactions.
He said now is the time to maximize the advantages of online transactions. First of all, online transactions remove the need to go out for a trip to the bank. This reduces potential exposure to the virus and allows the quarantine to be more effective in stopping the spread of the disease.
“If your money is in the bank and you have online banking, you can just stay at home and do those tasks and many more online. For example, I paid my bills and sent money to my parents through online banking. And then I've used my debit card on apps to buy groceries, have food delivered to me, and even send financial donations,” he said.
Ultimately, he said the key is to stay calm and not give in to fear during this extraordinary time.
“Anticipate your expenses and withdraw only the money you'll need for the next 2 weeks. And when your cash starts to run low, then you can just do a quick visit to the nearest ATM. There's no need to stash a lot of cash at home. It's normal to feel anxious about what's happening, but it's also important to stay grounded and not let fear control our decisions,” he emphasized.
For those who have limited online access or need to make important transactions within bank premises, the country’s leading bank BDO has kept many branches open in selected areas. Its bankers, managers, tellers, and other staff continue to work at the frontlines to help keep the country’s economy running through the crisis brought by the global pandemic.