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Adapting to the weather is key to surviving
Published On , 29 Jul 2019 By TT Connect
Preparing for the monsoon involves fixing your rain gear, storing essentials and carrying out leakage repairs. Personal finance is no different.
You got to prepare for the rainy day. Financial emergencies like job loss and medical emergencies can wipe out savings in no time.
Here’s a personal finance boot camp to equip you with financial security during rainy days.
DIFFERENT GEARS FOR DIFFERENT SEASONS
You need protective gear for every season. For winters, it’s warm clothes; for summers, it’s sunscreen; and for rains, it’s the umbrella or a raincoat. Why do you need these gears? You need them to adapt to the season. In finance, you need different investments for different financial seasons. For example, an emergency corpus through Liquid Funds can help you during emergencies. Similarly, for long-term Goals, you can invest in Equitybased Mutual Funds; for short-term Goals, Debtbased Funds.
ADAPTING IS THE KEY
Can you control the rains; the summer heat; the cool winter winds? Adapting to the weather is the best strategy. The better you adapt, stronger will be your immunity. In finance, you cannot control financial emergencies, but you can adapt to them. Having a strong emergency corpus can help you adapt and build immunity against financial storms.
You use an umbrella during rains. You also use it during summers. Sometimes, you prefer diversifying and use a raincoat or a bag cover along with an umbrella to manage risk. In finance, you can use Hybrid Funds to manage your risk and returns. Here, you can get high returns during market peaks and stability during market plunges.
STARTING WELL AHEAD OF THE SEASONS
When do you start preparing for the rains? A week before the rains? A month; or 6 months? The earlier you start, more time you will have to do leakage repairs. Similarly, it’s better to buy an air conditioner or a cooler before the summer begins. In finance, early investing can give you an edge over the weather. For example, starting retirement planning early can help you leave your 9 to 5 job way before your retirement age. Also, you need to start emergency planning as soon as you start earning, and not when an emergency arrives.
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