As the world struggles with the COVID-19 outbreak, the economies of several nations have witnessed a major downturn. These trying times have given birth to several issues, one of them being the uncertainty related to making investments. Several people are clueless regarding how to invest their hard-earned money during the COVID-19 pandemic. Some of them are even wondering whether investing in such times is a wise choice. To help them clear their thoughts, we are going to have a look at some tips that can make investing a lot easier during this pandemic.
As the world economy witnesses a major blow, the possibility of liquidity crunch increases. In such a situation, make sure that investments are adequately liquid, so as to address unforeseen exigencies and short-term needs. Also, you must focus on short-term goal based investing. There are a lot of investment plans in India. You can compare different investment options and settle for the one that best suits your needs. You can consider investing in Unit-Linked Insurance Plans (ULIPs). ULIPs offer insurance and investment under a single plan. Goal based investing through ULIPs can help you meet your short and long term financial goals with ease.
Create a backup plan
Since a pandemic can lead to job loss or pay cut, it is essential that you create a backup plan to keep yourself financially secured during this period. You must work towards building an emergency fund. You can do so by keeping aside three to six months of your living expenses. You can consider keeping this money in your bank or liquid funds. Building an emergency fund can help you get through this pandemic without you being financially depleted.
Pay off your high interest-rate debt
Make sure that you are free of high interest rate debts before you start with your investment. If you have credit card debts, ensure that you clear them at the earliest. This is because if you have high-interest credit card debt, then your interest payments may exceed the return on investment. For instance, if you have a credit card that charges 20% annual interest rate, and your investments are growing by 10% annually, then you can end up decreasing your net worth gradually. Therefore, it makes more sense to pay off that debt as soon as you can, and then start with making an investment.
Seek advice from financial experts
It is advisable to seek the help of financial experts before making any major investment-related decision at such times. You can consider taking suggestion from financial advisors having great knowledge regarding investments, as this can help you pick the right investment product for yourself. A combination of data and human experience will help you make the right investment decision for yourself. With time, you will also learn how to invest money to obtain a profitable return at minimal risk.
Make sure that you evaluate your risk-appetite carefully before moving ahead with any investment. A smart investment is the one that can help you yield optimum returns at lower risk. By making a note of all the tips mentioned above, you will be able to invest wisely during a pandemic.