Invest in Credit Risk Mutual Fund or not?

In January, it started to feel like India was moving past the Covid crisis. But now we are clearly in the middle of a much larger second wave. There is a sense of foreboding with lockdowns again being implemented across multiple parts of the country. A feeling of helplessness at seeing friends, family and loved ones facing challenges in getting treatment and proper care because the healthcare infrastructure is so overburdened.

There are only a few things that one can do to protect yourself from the virus:

Mask up: Wearing a mask properly with a tight seal around the nose and chin is helps to keep the virus at bay. There is some evidence to suggest that wearing double mask is an added layer of protection

Maintain social distance: This is now becoming mandatory in many parts of the country with lockdowns being imposed. Even if it is not, the less people you interact with, the less likely you are to either get infected or to transmit the infection to others. This is why it is important to avoid public spaces and stay at home unless necessary to travel outside.

Washing your hands: Regularly washing your hands is one of the best ways to prevent an infection from spreading from one person to another and through the community. And

Vaccination: Taking the vaccine helps in reducing the transmission of the virus and even the severity of the infection from Covid.

Similarly, we must not forget about the devastating effect that Covid has had on people’s finances.

Here are a couple of steps that we must take to bolster our personal finances:

Create an emergency fund: During the lockdown last year, many people lost their jobs or had their businesses shut and therefore faced a loss of income. Some might have had some savings set aside which got depleted. There is no better time to rebuild a safety net in the form of an emergency fund to provide a buffer against future financial setbacks.

Get protection with insurance: Hospital bills can rack up quickly in times when critical care is needed. This is why health insurance is an important tool in building a buffer that can prevent financial distress. Similarly, other types of insurance might also be appropriate depending on the family situation particularly the number of financial dependents. Talk to your insurance advisor to review your policies and see what is appropriate for your situation.

Create an investment file: Make a file that contains all the details of the family’s investments and insurance policies. Ensure that at least one other family member is aware of it. This can be handy in case of any emergency or in case of death of the person primarily responsible for these investments.

Review nominations: Whilst creating the investment file, review all the holding patterns and nominations in policies and investments. Ensuring that the nominations are in place is a prudent step in helping keep family finances secure

Keep spending in check: The lockdown in a way forces you to cut spending because travel cost and spending outside the home goes down. But being locked up at home also increases the urge to spend online. Keeping this spending in check is an important tool in increasing the savings and keeping the personal finances healthy

Review financial goals: Given the impact that the Covid-19 crisis, the priorities and timelines of financial goals might have undergone a change. It is important to regularly review personal financial goals and to check whether the goal time horizon should be extended, whether the amount to be saved needs to change and whether a financial goal is a priority anymore.

(The writer is founder and MD, Kairos Capital. Views expressed are personal)