Take The Right Steps Towards Financial Security

by | July 9, 2021, 10:18 IST


Beyond health, the pandemic has had another huge impact on people: careers and job security were given a huge shake-up. Many lost jobs as the economy dipped, because companies downsized due to losses, or because WFH wasn’t feasible. Others retained employment, but without the assurance of keeping those jobs in the future.

This era of financial instability has driven home the importance of investing at the right time and in the right way to ensure fiscal access in times of need. Investing a small amount of money regularly can help give you a side income when your regular income is not steady or is at risk. “Having the right asset allocation suiting your risk profile can work wonders for your wealth creation journey,” says CA Rishabh Parakh, founder of Money Plant Consultancy and author of Financial Spirituality.

Keep Liquid Funds
“Always maintain a minimum of three months’ income or salary in a liquid or short-term debt fund for a rainy day,” says Saloni Parikh, an expert on Miss Piggy Banks, a user-centric financial platform. This gives you easy access to some money for medical or other emergencies if you cannot access your invested money for a while.

Go Slow And Steady
“Invest gradually; never invest in one go, especially at this market level, unless there is a huge opportunity in terms of a market crash,” Parakh advises. “Else always invest in tranches (meaning, portions).” This reduces risk too. “Invest in direct equity stocks,” Parikh adds. She also notes that market volatility offers you many opportunities to build a strong portfolio and grow your wealth steadily. “Opt for a SIP (Systematic Investment Plan) approach and be cautious and a tad bit conservative.” A SIP is an investment option that works for the long term. Investing small amounts in low-risk mutual funds can help you receive assured returns at the end of the term.

Start Small, Start Young
“Start a SIP in an equity mutual fund that aligns with your financial goals and risk profile,” advises Rushika Sabnis, also an expert on Miss Piggy Banks. “There is no minimum age to start your SIP. You can begin with investing small amounts and increase them as your income increases.” 

Insure For The Future
“Use up to five per cent of your savings for term and health insurance premiums,” says Parakh. “Make sure to have good cover suiting your financial goals.” This ensures you get a decent sum at the end of the term with respect to term insurance or, in the case of demise, your nominee will get the death benefit. Health insurance helps when you need instant monetary help for medical reasons.

Be Regular And Prudent
“First save, then invest regularly and prudently each month; try not to push it to the next month,” advises Parikh. And don’t dive headfirst into investment. First look at saving enough money over some time. When you have saved up a decent sum, you can use some of it for investments. Study the types of investments available and see which work best for you. You can take professional help for the same too. Once you start investing, do so habitually without missing any month, to ensure guaranteed returns.

Allocate Wisely
“Plan your asset allocation, especially with regard to investing in equity,” Parakh says. “If you are in your 30s, a minimum of 50 to 60 per cent can be invested in the stock market via a combination of blue-chip stocks and mutual funds.” He also adds that you can use mutual funds for diversification. “Invest 10 to 15 per cent of your savings in fixed instruments like Provident Fund, Public Provident Fund, National Pension Scheme or debt mutual funds,” he advises. Building a good portfolio is essential to have good returns. Don’t put all your eggs in one basket, and ensure you follow a systematic approach to investment instead of pooling it all together at one time.

Go The Gilded Way
“Invest 10 per cent of your investable funds in Gold Exchange Traded Funds (ETFs) online. They are safe and act as a hedge against other asset classes,” Sabnis informs. Gold ETFs track the price of physical gold, so you get an equivalent number of units of the ETF based on the current price of gold. When you sell these, the rate is the same as the current price at the time of sale. “Avoid buying physical jewellery for investment purposes,” Parakh avers.

For a better return on investment, you need to research yourself or with the help of a professional. Strategise – plan and implement a proper investment plan. Keep the above points in mind when doing so. If you invest at the right time and with the right amount in the right investment option, you will get the best results.

Do Keep In Mind…
Where and how much to invest is subjective. Do not go by what you read over forwards and on social media, unless you can ascertain the facts. It also depends on how much savings you have and how much of it you can use for investments. Start with smaller sums of money, to begin with until you settle into a regular pattern for investment. Once you have more ready funds in place, you can increase the amount of investment. Don’t put all your investment in only one option; look at different ones that can work for you. It is ideal to research for yourself, and also seek professional help if required, to make the right financial decisions.

Also read: A Guide For Working Moms To Earn Financial Independence In 2021
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