CHENNAI: The pandemic has taught people about the need to maintain emergency corpus funds. Covid-driven job losses, sudden and sharp salary cuts, and health emergencies run rampant, and many—millennials in particular—have been forced to realise the value of putting away money for a rainy day.
According to financial experts TNIE spoke to, millenials should ensure that they derive this lesson from the Covid-19 experience. “Youngsters, usually in the initial days of their career, believe in the ‘live in the moment’ theory and keep their savings and investment plans for later. This is incorrect. The coronavirus has proved how important savings are,” said S Vijay Kumar, a wealth manager.
These experts also say that millennials should waste no time in chalking out their budget and expenses, and focussing on creating assets—in low-risk investment options to start with. Gold, they say, is generally a stable and safe investment for the younger generation, as is keeping an adequate corpus in fixed deposits if such funds are available.
Investing in gold has also become easier and more convenient with the arrival of digital gold. If small amounts can be saved every month, then a systematic investment plan (SIP) in a mutual fund, or even a recurring deposit in a bank, can be good investment options. However, SIPs and recurring deposits only gain adequate traction and accumulate sufficient returns if the payments/investments are made as steadily as possible.
Financial experts point out that insurance policies can also serve as an equally important financial safety net—another lesson driven home by the pandemic. “Insurance not only helps one to be better prepared for exigencies, but also guarantees long term benefits,” pointed out Shalini Agarwal, a financial planner. Young investors, she adds, should reduce their dependency on credit cards and avoid credit purchases as much as possible since these only increase one’s liabilities.