In what is now being dubbed the Great Lockdown our lives have changed immeasurably. Many of the things we take for granted in modern life such as eating out or commuting or going on holiday have been suspended. When we do eventually get back to some kind of normal we should remember this time and learn some lessons from the lockdown.

This is not about obvious life lessons such as the undeniable power of human interaction and the importance of our health. I just want to talk about the financial lessons. First and foremost …

… have a cash reserve.

This crisis highlights the absolute necessity of having a reasonable rainy day fund because at times of income disruption bills still need to be paid.  So if we have money invested we can avoid pulling the plug at the worst possible time. Because if stock market history teaches us anything it is that …

markets rise … and fall … and rise again.

We may have learned this lesson in the Great Recession of 2008 but it still comes as a shock when markets crash. We must remember that a recession like this is on average a once a decade event and that markets will eventually recover above and beyond previous highs. Which is why we must …

… stay invested.

Which means leaving a calculated amount of our wealth in equity markets for the long term because guessing highs and lows is impossible. And in this life investment strategy it’s vital to …

diversify.

By which I mean spreading our money globally and across different asset classes so that we are never over-exposed to ‘one thing’ such as property, or oil, or Ireland, or airline shares, or whatever. And finally, everything I’ve mentioned we should already be doing because we …

… have a financial plan.

Which ensures that we always have the comfort of a cash buffer. This allows us to stick to the plan and, even in income breaks or market sell-offs, we are never forced into bad money decisions.