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The current situation is indeed a grave one. The Corona virus has spread like wild fire across the globe. No country has been spared from its clutches. The number of infected patients is growing by the day. Its effect is also seen on the global economy. Markets across the world have shown a decline in response to the rising threat of the pandemic.
During such difficult times, naturally the first priority in everyone’s mind is the health and safety of one’s family. Staying at home and taking steps to improve immunity such as washing hands frequently, eating healthy food, exercising regularly,etc. are the best vaccines against Corona virus at this point. It is also important to ensure that we keep ourselves financially fit in order to deal with any emergencies that may arise now or afterwards due to this pandemic.
As the demand rises and the supply decreases, the inflation will rise leading to higher prices of groceries and other daily necessities. If anyone falls sick during this time then medical treatment will also have a huge drain on finances. Plus looking into the future it is almost inevitable that a recession will follow as soon as the world recovers from the pandemic. Due to incurring huge losses, businesses will look to cut costs through layoffs, decreased annual appraisals, etc. Keeping all these in mind, it is important to take steps to keep ourselves and our family financially fit and ready to deal with the situation at hand.
Below is a 21 step plan that can help to ensure that you and your family are financially fit to battle the Corona virus.
Emergency fund
Set aside 12 months’ worth of expenses as emergency fund.
Liquid cash
20% of the above emergency corpus should be kept as cash with you for any immediate expenses.
Liquid fund
Remaining 80% should be kept in a liquid fund. Funds such as Axis liquid fund allow instant redemption upto Rs.50,000.
Lower your expenses
Lower your unnecessary expenses such as shopping, eating at expensive restaurants, ordering food from outside, etc.
High savings rate
Maintain a high savings rate during current times of crisis.
Life insurance
If you are married or have family members dependent on you, ensure to have a life insurance cover equal to 10-15 times your
annual income. It is advised to go for a term insurance plan rather than a traditional endowment plan as it provides the highest coverage for the least premium.
Health insurance
Ensure to have a sufficient health insurance cover(preferably at least 25 lacs).
Top-up health insurance plan
To minimize the cost, you can take a base health insurance cover of 5 lacs and then take a top-up plan of 20 lacs or more
Take a family floater plan
Health insurance should be a family floater plan(if you are married).
Do NOT stop your SIPs
If you are already investing in a mutual fund, continue with your investments via the SIP route. There is no need to panic and stop
the investments. In fact these are the times that provide opportunities to really build wealth.
Start investing in a mutual fund
If you have not yet started investing in a mutual fund, then this is the high time to do that. Choose a good equity mutual fund and start investing in the same through monthly SIPs.
Select stocks carefully
If you are investing directly in stocks, exercise caution and choose the stocks wisely.
Never indulge in trading
Stay away from short-term trading, futures & options at all costs.
Aim long term
Invest in the stock market only for the long term(15 years or more).
Blue chips are the best bet
I personally prefer to invest in blue chip stocks during current times of volatility.
Good blue chip stocks
Some examples of good blue chip stocks are TCS,Reliance Industries,IRCTC,HDFC Bank, etc.
Newbies go for mutual funds
If you are new to the stock market, invest preferably through mutual funds only. It is advised to stay away from direct stock investing till you gather a better knowledge about the stock market.
Diversify your investments
Spread your investments across different asset classes such as mutual funds, stocks, fixed deposits,P2P loans, etc.
P2P is the perfect asset class during volatility
During present times of volatility, you can consider alternate investment options such as P2P loans. The returns from such loans are independent of the market volatility and ensures you have a continuous cash flow throughout.
Go global
It is also a good idea to spread your investments across different global markets. That way if one market underperforms the others will ensure that the total returns on your portfolio remains on the positive side. Vested is one such platform that allows Indian investors to invest in US stocks and mutual funds.
Take care of your health
Last but not least exercise regularly and ensure to consume a good nutritious diet everyday. It is becomingly increasingly clear that people with lower immunity are the ones who are most susceptible to the virus. So take care of yourself and keep your family safe.
Stay at home, stay safe guys. Take good care of yourself and your family. Follow the regulations set by the Government of India to contain the spread of the virus. Avoid going out as much as possible except for emergencies. Let us all join hands and stop this deadly virus right in its tracks.