Covid-19 Outbreak: 7 tips to stabilise your finances during Coronavirus crisis

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April 21, 2020 6:47 PM

The lockdown period is the best to build and rebalance our investment portfolio by checking out the outcome of various financial products to achieve life goals.

Coronavirus Outbreak, Novel Coronavirus COVID-19, global health crisis, job loss, lockdown period, investment portfolio, financial products, emergency fund, ULIP, Life Insurance, Health insurance, Mutual Fund, NPS, MF, FD, PPS, Sukanya Samriddhi YojanaThere is every reason to do financial planning as the economic slowdown will be far deeper and longer in comparison to the 2008 financial crisis.

The spread of Novel Coronavirus COVID-19 may hit the economic landscape of developing countries hard, as as the success in containing the infectious virus will come at the price of global economic recession. Given the deteriorating conditions across the globe, recession is likely to impact stock markets, shutter businesses causing millions to lose their jobs – changing the course of history like never before.

“It is increasingly difficult to predict the end of the recession. However, there is every reason to do financial planning as the economic slowdown will be far deeper and longer in comparison to the 2008 financial crisis,” said Ankit Agarwal, MD, Alankit Ltd.

“Fortunately, there are wise moves that we can make to stabilise our finances as we hunker down in our homes to flatten the curve of the pandemic. It is crucial to consider paying off any high-interest debt (credit card balance, personal loan, etc.) now to build a breathing room in your financial budget and ensure you have no outstanding debt to be around when the next downturn comes,” he added.

According to Agarwal, the lockdown period is the best to build and rebalance our investment portfolio by checking out the outcome of various financial products to achieve life goals by taking the following steps.

  1. It is highly imperative to boost emergency funds by reserving a pool of cash to afford our necessities during events like downturns.
  2. In the long term, ULIPs help investors create wealth by investing in Equity or Debt related funds with a minimum 5-year lock-in period ensuring the tax benefit under Section 80C and providing Life Insurance to investors.
  3. Guaranteed Return Products, as the name claims, allows investors to systematically invest year on year and reap assured benefits in a world full of uncertainty and during market volatility.
  4. Mutual Funds help investments to flourish along with the benefit to save on taxes. Market volatility is a silver lining for investors to invest in the share market and enhance financial security.
  5. Since the National Pension System (NPS) is a long-term retirement financial tool, it is wise to allocate assets by adding more to equity as it has the ability to generate higher returns.
  6. In uncertain times, Health Insurance works as the perfect wealth protector against a medical emergency and it’s a small price that shouldn’t be cut off the budget to safeguard your family.
  7. Money invested in long-term investment schemes such as Fixed Deposit (FD), Public Provident Fund (PPF), and Sukanya Samriddhi Yojana (SSY) accounts to earn a sheer amount of interests and benefits in the future will be a fair decision.

“Observing the economic disruption can be frightening even if you are fortunate enough to have a job in hand or source of income. While we wait for things and lifestyles to return to normal, the above listed are the few economic tasks to take as an opportunity to get ahead with financial planning during an uncertain period of home detention,” said Agarwal.

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