Warren Buffett on How to Financially Survive the Coronavirus

Take advantage of low interest rates

Buffett became one of the wealthiest people on the planet by capitalizing on opportunities. He sees some fantastic opportunities right now, courtesy of central banks.

"This is a very good time to borrow money, which means it may not be such a great time to lend money, but it’s good ... that it’s a good time to borrow money," he said in May at an online shareholders meeting for his company, Berkshire Hathaway.

To help the economy recover from the coronavirus, the Federal Reserve in the U.S. "did the right thing" by cutting a key interest rate to near zero, Buffett said.

The Bank of Canada did the same here, and now, for homebuyers and homeowners, it's an excellent time to borrow.

Rates on new and refinance mortgages are the lowest on record. It's even possible to find five-year loans with rates under 2%, if you shop around and compare mortgage offers from several lenders.

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Always be ready for the worst

They don't call him an oracle for nothing. The multibillionaire said during an interview in March: "I've always felt a pandemic would happen sometime."

Last year, he warned that the world was due for a "megacatastrophe." Buffett told his shareholders in a letter that it would be some kind of "total surprise" that would dwarf devastating hurricanes Katrina and Michael.

He said Berkshire, which is big in the insurance business (it owns Geico and other insurers) would suffer massive losses — but would be ready for business the next day.

Like Buffett, you can be prepared for whatever comes — by buying life insurance, which provides financial protection for your loved ones. In just 90 seconds online, you can find multiple life insurance rates tailored to your family’s needs, costing as little as $1 a day for $1 million in coverage.

Don't carry credit card balances

With layoffs skyrocketing during the outbreak, Canadians have been piling on more credit card debt to pay basic expenses. In a recent Angus Reid poll of 1,500 Canadians, two thirds said a job loss or reduced income would plunge them into a severe financial crisis, if it hadn't already happened.

Racking up credit card debt due to financial hardship is one thing, but Buffett says some people still use their cards as "a piggy bank to be raided."

At his recent virtual shareholders meeting, he talked about a friend who came into a windfall and asked for advice on what to do with it. She also had credit card debt — at 18% interest.

"If I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off," Buffett said he told her. "You can’t go through life borrowing money at those rates and be better off."

Whenever credit card debt seems overwhelming, experts say a good first step toward getting rid of it is to scoop it into a debt consolidation loan — at a much lower interest rate than 18%.

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Stick to your long-term plan

Warren Buffett says he's confident the U.S. economy will bounce back from the COVID-19 pandemic.

"Nothing can basically stop America," he said at the online shareholders meeting. "We haven’t really faced anything that quite resembles this problem, but we faced tougher problems. The American miracle, the American magic has always prevailed, and it will do so again."

But he also said no one knows what's going to happen, so investors should brace themselves for a potentially long recovery.

"You’re going to get a fine result if you own equities [stocks] over a long period of time," Buffett said.

In other words, you need to hold on tight during times like these. A certified financial planner through your bank can help you stay focused with your investments.

Make sure you look at long-term, high-interest savings options, too. Some banks like Scotiabank are offering savings rates of up to 0.6% and $300 welcome bonuses for their Ultimate and Preferred packages.

Be careful with stocks

The coronavirus is ravaging entire industries, including retail, restaurants and entertainment. Buffett has decided the damage to one particular industry is more than he can bear as an investor.

"The airline business — and I may be wrong, and I hope I’m wrong — changed in a major way," he told shareholders during the meeting, explaining why the company sold off all the airline stocks it owned.

Buffett says people have been heavily discouraged from flying, so "the world has changed for the airlines."

One of the carriers Berkshire dumped from its portfolio was Delta Air Lines (NYSE: DAL), whose stock price has lost half its value since the start of the year.

Buffett looks out for his shareholders the way a robo-advisor can protect an everyday investor like you. These automated investing services swiftly adjust your portfolio to give you some cushion whenever individual stocks or whole sectors go off a cliff.