It’s been a year of the COVID-19 induced lockdown in India. The year 2020, was filled with many stories, less happy and more sorrowful stories. It was full of more financial and health crisis stories. There were more job-loss stories than job-gain stories. Overall, the year 2020 has a strong impact on people's lives and their finances.
Well, a story is worthless until and unless we do not get to learn life lessons from it. Similar is with the financial stories of the year 2020. The more it was full of tragic financial crisis stories the more there was a lesson for normal people or for investors to learn from these stories.
Let us have a look at some financial and money lessons that the COVID-19 and lockdown taught us!!
No Alternate For Emergency Fund, Its Must!
Well, this lesson will be best understood by the people who had lost their job during the lockdown and were finding it difficult to monthly expenses. Yes, a sudden job loss that too at a time when everything was closed, now new recruitment news, no new job offers, become too terrific for an individual to manage. Thus, it is suggested always be ready for emergencies as they never come with an alarming sound!
Keep aside six months’ worth of household expenses if you are salaried. But if you are a freelancer with uneven income flow, earmark 12 months’ expenses to this fund.
What to do if I exhaust my emergency fund during a lockdown? If you have utilized your emergency fund, then do not for any second emergency situation to occur, rebuild it as soon as you can. Make it a prior goal in your checklist, go cutting down your discretionary expenses, and park your extra cash in low-risk and highly liquid funds like ultra-short-term funds, liquid funds, and more.
Health Is Much More Important, Protect It With Insurance Cover!
There were many cases, where COVID-19 led to family members being hospitalized. Sudden hospitalization of more than one member of the family means a good financial expenditure. For those who had their family protected with health insurance cover, the deal was easy for them. Their focus was only to get recover from the COVID-19, but those who had not their family covered with health insurance, struggled to recover from COVID-19 as they were hit from all directions, mentally, physically, and financially.
Experts suggest a cover of at least Rs 10 lakh is vital, even if you have the employer’s insurance. So, if you don’t have the health insurance cover yet, plan it now and if you have health insurance cover, make sure it is adequate for your family.
Take adequate life insurance cover, too. This should take care of your family’s expenses if you die and can pay off your liabilities and help reach crucial goals (such as your children’s education) on track.
Do Not Disturb Your Regular Investments!
Experts say, that besides all these money and health crises, what must continue is your investments, you must not disturb your long-term investment for big financial goals to repay loans, or debt or to carry out your short-term expenses.
Never pitch your Employee Provident fund or equity investments to repay loans or debts, just remember this kitty you are preparing is for days when you will be unemployed that is retired and uncertainty will be more. Do continue your regular investments for the long-term to secure your big financial goals.
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For any kind of query you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).