HOW TO PROTECT YOUR FINANCIAL GOALS DURING PANDEMIC?

The ongoing pandemic has slow down the economy and most of the investments have failed to meet investors return expectations, thus, making common people to feel unsure about the market. However, it could be cyclical economic phase but ignoring your financial goals and your investment portfolio at this crucial time may prove to be a costly mistake. Here, we are listing few measures that will help you tide over tough times.

• Opt to invest in installments: Most of the investors may find it risky to invest in the market when it’s volatile to avoid the adverse impact on their entire investment corpus. Therefore, best way to invest during such circumstances is investing in installments. It will allow you to get the advantage of rupee cost averaging and lower the impact of market volatility as your investment is dispersed in installments.

• Don’t stop SIP: Quitting SIPs in a downturn may prove to be a biggest mistake an equity investor can make. It negatively affects the purpose of the SIP by refusing the investor the opportunity to accumulate more when the prices are low. One cannot understand the concerns of investors because data from mutual fund tracker research shows that SIPs in two out of five diversified equity funds started three year ago are in red today.

• Choose less volatile funds: Nowadays hybrid funds are best to protect the downside for the investor in prevailing market situation. These are planned to limit the volatility in returns and suit investors who can’t suffer ups and downs but need some equity exposure. The equity saving funds is also another category of hybrid nature which is a mix of shares and equity derivatives comprising at least 65% of the portfolio. The lower equity exposure makes the funds less volatile and benefits you from equity taxation.

• Avoid debt-trap: It is always better to stay low on debt when you are unsure about the market. In case the situation worsens, one may find it difficult to repay the credit card bills, personal loan, home loan, "Gold Loan" etc. which can easily spoil your financial goals. So, do not opt for multiple loans to repay the existing loans till you become sure that the market is stable to achieve your major financial goals on time.

• Get insured: Whatever could be the market scenario, nobody wants to face severe financial challenges such as unforeseen risks like accidents and hospitalization. Therefore, to avoid such risks and to stay protected, one must get an appropriate insurance cover. To illustrate, consider health insurance plan for health related risks and you must also get a life insurance to ensure your family security.

• Don’t invest in property: The housing finance companies are luring the customers by offering big discounts and lower interest rates, these days. The economic slowdown may take next few quarters to improve after this economic slowdown as housing market has not done well in the past one year. These companies are sitting on huge inventories which will take ample amount of time to clear.