COVID-19 Second Wave has struck India and this time it’s worse than before. On Wednesday that is 14th April 2021, the number of new cases recorded in India was above 2 lacs, and this obviously is not good news for us. To break this chain spread, governments of different states have imposed lockdowns or curfews in their states.
We have still not overcome of sorrows that we had gone through in the year 2020, due to this COVID pandemic and long-imposed complete lockdown. Due to complete lockdown last year people were shut indoors, the economy was hit badly, people’s finances were hit badly, many lost their jobs. Well, there was one positive thing about the first wave of COVID-19, it taught hard money lessons to individuals
Well, now it’s the time to check out how efficiently we learned these money lessons, and would these money lessons help us better placed this time around?
Emergency Fund And Health Insurance Are Must!!
An adequate emergency fund that can cater to your at least 6 months' expenses in a financial emergency situation like job loss, is an all-time necessity of your portfolio. This was the prominent money lesson taught by the COVID pandemic.
Your emergency funds that are equal to a minimum of six months’ expenses and equated monthly installments (EMI), help you cater out your financial needs without any hitch in times of job loss or pay cuts.
If you have rebooted your emergency fund, too good for you but if you haven’t your emergency fund prepared, I would suggest do it now. The good news is that equity markets did well in the last year. Take some money off the table and have it as an emergency corpus.
Coming to the second essential part is your health insurance. If you have a health insurance cover, make sure that its cover is adequate for you and your family's emergency medical needs.
Be Confined To Necessary Things While Spending!
The first lockdown changed our spending patterns. The money that we usually spend on travel, dine-outs, and other unnecessary things got stopped as we were at home during the lockdown. While those who suffered pay cuts or job loss have cut down their expenditure. There were also the third kinds of people who got themselves busy with online shopping out of boredom and ended spending unnecessarily.
So basically, people need to understand that such unnecessary spending is no other than wastage of money. They only damage your finances in case of a job loss or a fall in income.
Markets Are Volatile And We Know It Better Now!
Last year when the S&P BSE Sensex fell 32 percent in March, investors out of panic and fear quit from Equity fund investment as soon as possible. However, they only regretted their decision when the equity mutual funds started showing positive recovery just after some months. Well, those who calmed themselves and stayed invested, enjoyed the benefits of Equity mutual funds recovery.
This year experts are expecting to investors understand that the equity market can behave choppy, for some time this year, depending on how bad the COVID-19 situation gets. But the falling market is not a situation where you should quit or pause, in fact, it is a situation when you can build your portfolio stronger. Invest more in your equity funds and get more and more units at low NAV. Once the market bounces back you will surely reap good benefits in the long term.
The COVID-19 pandemic has not affected all countries uniformly. You can derive the benefit of diversifying overseas. Experts recommend starting with a small allocation to overseas index funds and increasing it over a period of time using SIPs.
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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).