6 Investment Tips to Tide over the COVID-19 CrisisJuly 27, 2020
As the country fights the ongoing pandemic outbreak by staying indoors, the spending habits of households are undergoing a change. With little opportunity to spend, except on basics, many are finding out what actually construes necessities and what were purely discretionary expenses masquerading as essential costs. The COVID-19 crisis has also disrupted the global economy as countless people have lost their jobs or sources of income, while many others have been asked to take a pay cut. To survive such a difficult situation, you need to take extreme precautions to manage your finances from getting adversely impacted by the outbreak. So, let’s have a look at how to invest money in times of coronavirus crisis
- Stick To Your Budget
With the ongoing lockdown with no shops and malls, the lockdown would have seen your monthly household expenses nosedive. Treat this period to control your expenses and save money. Every little expense cut down on is that much saved for the month. Even during the lockdown, resist the temptation to order food or things online. Start cooking basic meals from scratch at home, this is not only cheaper but safer too. Take this opportunity to review and prune all your bills and paid subscriptions. Sticking to your budget will help save enough funds throughout the pandemic crisis.
- Maintain an Emergency Fund
One should have at least six months’ of your monthly expenses secured in an emergency fund. The utility of this fund is only realized during a financial crunch. If you don’t have enough funds, it’s very important to cut back on expenses and keep money aside to meet non-negotiable expenses. With the economy taking a huge hit during the COVID-19, the spectre of job losses and pay cuts might make managing your finances difficult. Hence having an emergency fund ease the financial burden in tough times.
- Prioritize Life and Health Insurance
Both life and health insurance are a popular type of investment options over the years in India, still many people usually don’t understand the importance of term insurance until the need for finance is required. Having an adequate term insurance policy is the most cost-effective form of life cover. These are pure risk policies, and so you will not be entitled to any payout if you survive the policy tenure. Given the current situation, it is extremely essential that we plan carefully for uncertain events which may put a significant financial strain on you and your family.
- Borrow With Caution
Now many of you would be tempted to take a loan during this time, but I would suggest taking a loan only if you absolutely must. Try getting cash from other sources like an emergency fund or make use of your non-essential investments. Also, do not over-borrow and ensure you have a clear plan in place to be able to repay your loan in full on time before signing up for it. Your financial woes will only worsen if you’re unable to clear your dues.
- Try Not To Discontinue Your Investments
During such a stormy period, it’s not just practical but also critical to think about your financial health, especially if you don’t have a cushy amount of wealth to fall back on. However, making new online investments is not a good idea as you might need the money at such times. If you’re going through a cash crunch, see if you could manage to continue lesser important investments. These investments can be pruned to raise cash after factoring in the cost of liquidation like exit loads are penalties.
- Ensure You Have A Backup Plan Ready Before Taking A Loan Moratorium
If you’re unable to meet your debt commitments during this crisis, you may benefit from the RBI’s 6-month moratorium on loan EMIs and credit card dues. However, you must understand the rate of interest will continue to get accrued during the moratorium which could considerably increase your loan burden, especially if you’ve just begun repaying. So, if you opt for this facility, ensure you have a backup plan to repay this accumulated interest soon after the moratorium ends.