As we brave the COVID-19 pandemic, there’s no doubt that stress about our own health and the health of our near and dear ones has become a regular feature in our daily lives. And if that wasn’t enough, we are feeling financial stress with increasing bills, pay cuts, job uncertainty, and in some cases, even losing our jobs.
So, we invited Hena Mehta Agarwal, Founder & CEO of Basis, to host a #GirlTribeAMA on personal finance and money management on Malini’s Girl Tribe. Basis is a platform that powers financial independence for women.
She answered all questions on managing money in the current crisis, building and tapping into emergency funds, picking the right health insurance, budgeting and saving, planning financial goals, and even dealing with income changes with respect to work. She also helped the Tribe get clarity on current events such as RBI moratorium for EMIs, lower Fixed Deposit rates, etc. and what they mean for our money. Read on to know all her financial tips!
Q. So, with the random things happening in the market right now, is it better to not invest all together?
No, that may not be a wise decision. If you are intending to use the money after 5 to 7 years (i.e., you have a long-term goal), it is still a prudent practice to invest in equity mutual funds, and if you are looking at liquidity for the short term, you can stick with fixed deposits.
Q. Should I should stop my SIPs?
If you don’t need the money that you are investing via SIPs now, the simple answer is no. Don’t stop any SIPs at the moment. In fact, if you have extra money to invest, you could consider topping up those SIPs too.
Q. What can freelancers do in the current scenario?
First order of business is to ensure all past due payments from clients are done. For any upcoming or ongoing projects, check if you can get paid in advance. Don’t panic and pull out of any investments. In case new projects are not coming through, try to ‘pivot’ and see what different types of clients may need and how you can provide them your expertise.
Q. What are some ways I can increase my savings?
The good thing about the lockdown is that it has forced us to stop spending on things such as fuel, going out, discretionary shopping, etc. Overall, if you’re looking at increasing your savings rate, I’d recommend writing out what your essential and non-essential expenses are every month. Essentials are things such as rent, food, utilities, kids’ school fees—which we can’t do without. Non-essentials could be travel, eating out, some online subscriptions that you can live without, gym fees. etc. Try to cut down on these non-essential expenses.
Q. Any suggestions on what investments can be made (long and short) during this time to take advantage of the opportunity?
For the short term and as a safe option, you could stick within the comfort of fixed deposits. For the medium term you could look at balanced or balanced advantage funds of equity funds. And for the long term pure equity funds.
Q. How does a salaried person replan finances after taking a pay cut in this current scenario?
Taking a pay-cut is rough, but doesn’t seem to be unusual in the current environment we are in. Here’s my advice: break down expenses into essential and non-essential expenses. Don’t stop any SIPs or pull out of investments in a panic-mode.
Second, have a chat with your employer at the right time about future appraisals and growth to ensure the salary cuts are going to be short-term only.
Q. Is gold a good investment right now?
The current scenario might be a good time to add gold if you do not already have it to fortify your portfolio. Gold does tend to do well when stocks go down, so it’s a protection mechanism, and I’d recommend it be a portion of your overall portfolio.
If you’re looking to buy gold from an investment perspective, you have a few digital options: purchasing physical gold online, gold mutual funds, gold exchange-traded funds, and the Sovereign Gold Bonds. Physical gold comes with risks.
What is your biggest concern right now when it comes to your financial health? Please share it with us in the comments below!
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