As the virus situation worsens, the impact on companies is becoming more severe. SIA freezed hiring, staff may be asked to volunteer for no-pay leave and they are cutting flights to reduce capacity. Temasek freezed staff salaries (including promotion increases) and senior management is taking a partial cut in bonuses.
This is a bad sign. I get worried about a crisis when it actually reduces consumer and corporate spending in a wide range of industries. Because how well an economy does is in direct relation to general consumer and corporate spending. And that’s how banks make profits – by acting as intermediaries to facilitate such transactions.
When you start to see private sector firms from different industries and even governments & their companies take precautionary measures, this means it’s a widespread problem. Which has the worst impact to the local and global economy as it spreads. Before finally hitting the banks’ profits severely. And who knows how long general consumer and corporate spending confidence takes to recover.
This is becoming a test of who loses their job and hence their only active income source first. Or even whose active income is reduced significantly first. Which comes down to how much your company does to protect your job. This is when it’s better to work for MNCs than SMEs.
Because once you have no more active income and can’t get a new job in time, you are going to see how quickly panic can set in. Retrenchment is the fastest way for all your life plans as a salaried employee to be thrown out of the window no matter how much work you have put into them. Sucks to have no job.
My wife and I are aware of this because we graduated in 2009 right after the 2007/2008 Global Financial Crisis. And I struggled to get a decent full-time job that paid the bills, which continue to come due every month by the way even if you have no salary income.
It was a bad experience going through that in a foreign country with not much family and friends to turn to. Only had my wife (girlfriend at that time) to rely on and we had to learn to do so many things together. This really shaped the way we managed our finances together as a couple after that.
We have picked up many career lessons since then on how to ensure we continue to have a decent paying full-time job. These are just some of our corporate job rules we follow:
- Work in a profitable company
- Don’t be in a sunset industry
- Take calculated risks to expand skillset
- Ask for higher pay and position
- Don’t work for a bad manager
- Leave a toxic work environment and don’t stay for anything
- Job scope needs to be transferable to at least another industry
- Work for bigger private sector companies at the start
They are difficult to follow and we can’t always execute on all of them at the same time. But breaking any of our corporate job rules for a sustained period of time has always caused us to get into trouble. And it takes so much more effort to dig ourselves out of the hole after that.
As for investing, everyone always says they are not afraid of market dips and crashes because they have cash to invest. Stay vested in the markets seems to have been the conventional wisdom for the longest time. Something about having a lot of courage and willpower to stay in the market. But we forgetting it’s also an issue of who runs out of cash first and have to start drawing down on their investments.
And it always starts with a job loss, which being to dry up your cash holdings as you burn through them for all sorts of expenses. Before you know it, the time has come to draw down on your investments because you have no option left. So yes, it’s a lot more difficult to hold your nerve and position than you think. Because sometimes you have no choice. Now, who’s ready for what happens next?