A war is not pleasant and certainly not good for our wallets.

       Millions of people are suffering from the Russian led invasion of Ukraine and there seems to be no end in sight for now.

       The war has also roiled capital markets and crude oil prices are rising, thereby putting pressure on prices of goods and services, which in turn affects our wallets.

       Even though the impact is not fully felt here, a prolonged war will leave a bigger impact on our finances at a time when we have yet to recover from the Covid-19 pandemic.

       Moody’s Investors Service said Russia’s invasion of Ukraine carries growing risks to the global economy, with spillovers to the Asia-Pacific region through several channels – notably weaker growth, higher inflation and financial market uncertainty that will exacerbate pandemic-related economic scarring.

       Even though miles away, we should be concerned about the invasion as from a humanitarian perspective, it is disastrous.

       “It is similar to the armed conflicts in Africa and the Middle-East. We should monitor the Russia-Ukraine war closely, more so when the ongoing conflict disrupts global financial and commodity markets as there is also a risk that the conflict could escalate into a large-scale war involving more countries,’’ said Sunway University economist professor Dr Yeah Kim Leng.

       If that happens, the escalation to a war will cause a meltdown of the entire global economic system and put it at risk, thereby jeopardising Malaysia’s large external sector, he adds.

       Being an oil-producing country, we are somewhat protected as the pump prices for the widely consumed RON95 and diesel fuel is subsidied for now.

       The knock-on effects of higher fuel prices will vary in magnitude and timing and consumers will face rising inflationary pressures as the fuel price increase is eventually passed through to consumers, Yeah said.

       Inflation will also leave households with less money to spend. Best to revisit your budgets, spending patterns and trim what you can.

       Yeah said in facing rising inflation, it is obvious that the first-best solution is for households to ensure their wages and income increases faster than prices. But for most households, income determination is outside their control.

       The second best option is to cut spending or shift to cheaper substitutes. But that calls for lifestyle changes too.

       “If executed in tandem with a shift to healthier and more sustainable spending habits, the adaptation could be win-win for consumers especially if spending adjustments lead to increased savings.’’ Yeah said.

       For those with exposure to the capital markets, would the “switch and ditch’’ strategy in fear of a full blown war work?

       Yeah believes there are recession-resistant stocks especially those involved in the provision of essential goods and services as well as those where supply has been affected by the conflict or pandemic.

       Such stocks are expected to rebound quickly when the ‘risk-on’ environment materialises to amplify reward investors.

       “In any market, there will be good quality stocks that are undervalued and investors with holding power or longer investment horizon will find stocks to be a key asset class in their portfolios.

       “The best is to have a diversified portfolio to guard against various risks arising from over concentration of investment in a particular market, sector or instrument,’’ he adds.

       With the variety of assets available for investors, one can design an investment portfolio to meet his or own investment objectives and risk appetite, Yeah adds.

       He explains that Malaysia’s financial industry is sufficiently well developed for investors to seek professional advice and services to protect one’s investment.

       A report said “seek out cockroaches – the stocks that can survive disasters.’’

       It said, traditionally, it has been “railroads, healthcare and phone companies. Today, it is also high quality technology, currently profitable companies that are reasonably valued.’’

       When investing, know your risk tolerance and appetite as the choices you make are entirely yours, so are the rewards.

       Gold is also often seen as a safe haven in troubled times especially amid conflicts and wars.

       Yeah said gold price tends to rise during periods of heightened global uncertainties. The war in Ukraine has resulted in a ‘risk-off’ environment and caused investor’s flight to safety, of which gold is one of the assets considered to be safe in turbulent times.

       He adds that while current conditions suggest that the timing to invest in safe assets such as gold is right, its price trajectory is also dependent on whether the conflict will escalate and how long it will last.