The year 2020 changed our lives, including how we manage our money. Will 2021 be any different? Will the same money management mantras work as we step into the new normal?
2020 helped us realize that being reckless does not work, neither with our health nor with our money. Here are some simple and evergreen personal finance rules that will help you sail through these precarious times.
1. Change is the only constant
Always to be prepared for change. As we speak, changes are occurring in our economy, regulatory policies, politics, interest rates, and so on. Be aware and take the right guidance on your investments or when you are making changes to your investment strategy.
It is ideal to save when you are young, but remember it is never too late! The key is to be consistent and set a goal. Leverage technology to help you automate your savings plan. Once the plan is set in motion, stay motivated and save with discipline.
3. A well-diversified portfolio is important
Your risks need to be spread across various investment options. Pen down your short-term and long-term goals and then allocate your corpus across different buckets. For example, a direct equity exposure will entail volatilities, so don’t invest for a short time. Instead, stay invested to reap the benefits over a longer period of time, after researching properly. Include fixed deposits, balanced mutual funds, and other financial products in your portfolio.
Additional Read: Investing in different asset classes based on their risk
4. Get Insured
The year 2020 made us realize the importance of insurance. Having the right health insurance is crucial and cannot be ignored any more. Choose a plan that gives you adequate coverage for yourself and your family. DO read the fine print – understand what is covered and what is not covered in the policy. Similarly, take the effort and choose a life insurance policy that works best for you and your family. Don’t hurt your investments by not safeguarding yourself against financial losses in case of medical emergencies.
Head – Tata Capital Wealth