CHENNAI: The bygone year has been a tough one for most people around the world and has brought with it important lessons on the importance of being ready for emergencies. Because from sudden job losses to huge hospitalisation bills, 2020 had everything.
Experts say that taking a few lessons from 2020 is a key requirement for anyone looking to strengthen their financial security and stability. According to experts, the first thing people should take note of is the advantage in having yourself covered by an insurance policy. Insurance is not only necessary to protect your dependents but also makes you better-prepared to deal with unforeseen expenditures.
Wealth advisors say that people should definitely opt for a health insurance policy to reduce the financial burden in case of a medical emergency and a term life insurance plan to ensure the security of their families. After investing in insurance, it is important to create a liquid reserve to address contingencies. It is highly recommended to have an emergency corpus fund and experts say that breadwinners should ensure that they keep a corpus fund equivalent to at least six months of expenses.
Another important factor is to ensure that you don’t have any major debt. While it is now quite easy to take a personal loan, experts say that it should be a last resort and people should generally avoid pesonal loans. “It is wise to invest in a mix of assured-return and market-linked instruments which will help you to deal with a crisis situation in a better way, “ said S Gopalan, a Chennai based wealth advisor, adding that people should also not rush to liquidate their investments.