The pandemic has changed our lives. The suddenness and the severity of the lockdown have hit the world’s economy down to its last bits. Where we see a lot of people losing their jobs, and facing salary slacks, here are 5 tips from a finance and investing expert, Niranjan Bangera.
How To Spend?
Speaking about the current scenario, he says, “These are very difficult times, and nobody knows how things will turn out eventually. Whether one is facing a job loss/salary cut or not, one should do this exercise,” he says.
He continues, “List all the assets that you own – bank balance, shares, mutual funds, gold, property, and land. Put a monetary value against each. Then note down all the expenses in a month – travelling, ordering food, shopping, children’s fees, car expenses, etc. – include the smallest expense. Then reduce this figure by deciding what expenses can be avoided.”
More often, we overlook how much and where we spend our money. Jotting down everything makes things clearer.
Where To Invest?
Today, as we know, the market is very unstable. Keeping that in mind, when we asked him about the safest places to invest, he said, “One should consider investing, only when they are confident of their job, have medical insurance, around 6 months of expenses in reserve and the only debt should be a housing loan. The aim should be to reduce debt. So, debt mutual funds, gilt funds and some large-cap and diversified equity funds should be considered for investment.”
You can read up his detailed piece on the risks of investments here.
What Should You Avoid?
With limited resources of income now, panic leads a lot of people to opt for ‘instant money-making’ solutions.
Elaborating on the same, Bangera tells us, “In these ‘work from home’ times, there are a lot of stock brokerages and banks urging people to indulge in day trading. I think that is the most dangerous investment – especially if you do make some money initially!”
Avoid falling for these ditches, and instead, know your exact financial position. He explains, “know how much liquid assets you have and how long you can pull on if the job is lost or one gets sick.”
Another mistake, that might cost you is relying on credit cards. “One should not use credit cards as far as possible. The carryover balance attracts interest at almost 36 percent.”
How To Save?
Lastly, when we asked him about the most practical ways people can save money, he said, “Use the ‘pay yourself first’ method. As soon as you get your salary, pay yourself first by transferring anything from 20 – 30% into investments immediately and then living on the remaining money. The maximum amount in your savings account should be equal to one month’s expenses. All the rest should have been invested.”
He adds, “Keep track of your expenses. Put the smallest expense on a spreadsheet and at the end of the month, you will find many things that you can cut down on.”
His ultimate tip for everyone who is facing a financial lull is –
“This is a passing phase. Do not get disheartened. Be prepared.”
Niranjan Bangera specialises in Retirement Planning and Goal-based planning. He is a Mutual Fund distributor and a Real Estate Agent for more than 12 years.
You can check out his website here.