Thanks to the Coronavirus, which has forced people to stay at home, travel less and work from home, some Indians are saving more than ever before, considering the economic turmoil. During the pandemic, many of us were able to save a significant amount of money. If you're one of the many, you're probably thinking about how you can put this money to better use than making random purchases.
Given that we are all in the midst of a crisis, it is prudent to put money aside for the time being - whether for supplies, hospital bills, or basic needs.
If you intend to spend the money you've saved, make sure to set aside enough money for an emergency fund and a contingency fund. Saving money has always provided a buffer for our difficult times, regardless of the situation. And, in the long run, investments will still assist in the recovery of every pandemic situation.
Things to avoid during Covid 19 pandemic:
- Do not sell any of your investments just because the market is down. This is just a phase that will pass and economic markets will recover.
- The government has approved withdrawals from the Employees' Provident Fund because most workers are experiencing financial difficulties (EPF). EPF is a tool for building a retirement fund that will cover your post-retirement needs. However, if you use it to solve a liquidity issue, you risk losing out on the power of compounding, which can help you create a sizable portfolio.
- It's important to remember that a loan moratorium isn't the same as a waiver, and the EMI continues to be added to the unpaid balance, potentially leading to a higher interest bill. As a result, choose it with caution.
- It's important to avoid overspending during the pandemic. If you don't, you'll end up in even more trouble, with financial issues.
Check if your emergency funds are loaded
Before you invest somewhere, make sure it's stocked with three to eight months' worth of living expenses. Calculate your basics budget to make sure you have enough money set aside to cover those costs, such as rent or mortgage, electricity, and basic food if you ever need to find out how much money it is.
Planning to invest
If your funds are in good condition, consider your objectives and period, or when you want to use the money you've saved. While retirement is still a long way off for younger generations, it is still a good idea to start preparing for it as soon as possible. This is primarily due to two factors: life expectancy and inflation!
Invest Smartly & Cautiously
It is important to diversify one's portfolio. As a result, it's a good idea to allocate 10-15% of your portfolio's assets to gold as an asset class. The price of gold is inversely proportional to the price of stocks. During stock market crashes, it performs extraordinarily well. There's also the logic that it takes about three days for an investor to sell their mutual funds and get the money credited to their account. Markets will fluctuate a tonne before then due to uncertainty.
So, if you have a long-term goal in mind, remain invested and don't make any adjustments to your portfolio. Bonds, also known as fixed-income portfolios, help to reduce portfolio volatility. While the returns are typically lower than those of equities, they are ideal for investors who want to be certain of a return on their investment.
Investments should be connected to long-term objectives so that the investor does not have to scramble for cash when he wants it. In addition to equities, experts recommend diversifying one's portfolio with mutual funds, fixed deposits, gold ETFs, and government securities.
During the pandemic, smartness refers to how much money you put aside for emergencies and investments based on your current and projected needs.
The war against the Covid pandemic will be long, both personally and financially, and now is not the time to experiment with risky financial products.