Personal Finance in 2021: The year presented individuals with several new opportunities to grow their wealth. R
A lot has changed this year. When it comes to personal finance, the year was full of learnings; more so because of the Covid-19 second wave that ravaged lives across the country. The year taught everyone the significance of having control over his/her personal finances.
The year also presented individuals with several new opportunities to grow their wealth. After the damages of the second wave of the pandemic, came a bull market like never before.
Here’s a look at some of the top personal finance moments and lessons from 2021 that you should know before entering 2022.
Awareness on health and insurance policy
Having a life cover with term insurance is one of the safest ways to secure the financial future of one’s family. Experts believe that it is important to start term insurance at an early age to avoid hefty premiums. It is also important for one to have an adequate health insurance cover (including for family) which could come in handy during an emergency hospitalization.
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“During the surge in cases in the first and second pandemic waves, a lot of families had no choice but to use up savings meant for education, marriage and other big-ticket expenses on hospital bills. This made individuals realise the importance of health insurance. It is now an element of personal finance; prior to the pandemic, it was primarily employed as a tax-saving strategy,” Ajinkya Kulkarni, co-founder of Wint Wealth told FE Online.
Living with Covid-19: Keep contingency fund ready
Despite the Delta wave in the first half of the year, the country remained open for the major part of the year. As we enter 2022, there is a mounting risk from the new Omicron variant. The pandemic can end in one of the two ways, either we achieve “zero Covid-19” or the disease becomes an ongoing part of the infectious disease.
Experts say that societies will have to adapt to living alongside Covid-19. Therefore, for every personal finance plan, having a contingency fund ready for emergency purposes is a necessity, now more than ever.
Volatile Markets: Hold on, diversify investments
As markets corrected after touching the highs and losses starts to loom, it becomes difficult to avoid taking emotional decision to cut these losses. This mistake can be detrimental to creating long-term wealth.
“Your first defence against these mistakes is to craft a diversified portfolio across different asset classes that match your investment horizon and risk tolerance. During times of market volatility, while your risky investments – equities (domestic/global) may fall, the overall portfolio performance may not be so badly impacted. …….