Greeting For The Day!
The tragedy of 2021, was nothing more than the wildest dream, the crisis people faced, the life threat people were going through were unimaginable. The second phase of COVID-19 took millions of lives, impacted thousands of families, and pushed people into financial distress.
It taught us that nothing is more important than our health and it is an ultimate need for every individual to protect their health financially so that they can handle everything life throws at them.
Well, the world is recovering from the trauma of COVID-19, in the meanwhile, we have a new variant to fear from! In this situation what we can do is follow covid protocols and hope that we do not have to witness another one in our lifetime.
However, one more most important thing that every individual must do, ensure you are financially secure at all times by leveraging smart saving and risk management strategies.
Here are a few tricks and suggestions that help you save effectively for rainy days!
Emergency Corpus, The Ultimate Need…………..
An emergency fund helps you sustain in hard situations like no job, pandemics like COVID, any health emergency, and many other situations.
Having liquid assets at your disposal creates a financial cushion to deal with any crisis or unexpected expenses without having to disrupt your lifestyle, liquidate investments, or draw down additional debt.
The rule of thumb suggests you should have a reserve fund equivalent to at least three to six months of your monthly expenses; however, you could consider expanding the safety net over six to 12 months if you anticipate things to be challenging for you.
You can make a 10:20:70 allocation towards your emergency fund, wherein 10 percent is held in cash, 20 percent in the bank for quick remittances, and the balance 70 percent is invested in low-risk options such as short-term liquid/ money market funds that you can liquidate easily.
Have Adequate Health And Life Insurance………….
Not only because of the pandemic but other reasons also like, the rising cost of living and escalating medical costs both health and life insurance are necessary tools for being future-ready.
One should consider a comprehensive health insurance plan or a family floater with the maximum possible sum insured. Leverage top-up plans and add-on riders that allow you to significantly increase your health insurance coverage for a nominal increase in premium cost.
Similarly, life insurance, especially a term plan, is an inexpensive tool to mitigate the risk of uncertainty and secure the financial well-being of your family.
Manage Debt Effectively……….
Limiting your debt keeps discretionary expenditure in check, helps maintain a healthy credit score and credit availability.
In terms of preparedness, it ensures your savings and investment plans remain on track and you are not overly burdened if things go opposite. Here I suggest, using your bonus or investment profits or hefty commission to prepay your loans or debt amounts.
Remember that uncertainties are surprising and most of the time shocking, they will bring both – opportunities and challenges. By planning your finances and savings judiciously, you will be able to both weather the storm and bask in the sun.
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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).