Personal finance 2021: best moments and learnings %%page%% %%Sep%% %%sitename%%

Personal Finance in 2021 – The year presented people with several new opportunities to increase their wealth. R

Much has changed this year. As far as personal finances are concerned, the year was full of learning; even more so because of the second wave of Covid-19 that devastated lives across the country. The year taught everyone the importance of having control over their personal finances.

The year also presented people with several new opportunities to increase their wealth. After the damage of the second wave of the pandemic came a bull market like never before.

Here’s a look at some of the top 2021 personal finance moments and lessons you need to know before you enter 2022.

Awareness about health and insurance policy.

Having life coverage with term insurance is one of the surest ways to secure your family’s financial future. Experts believe it’s important to start term insurance early to avoid high premiums. It is also important that one has adequate health insurance coverage (including for the family) which could be helpful during an emergency hospital stay.

READ ALSO | How the prices of the top 15 cryptocurrencies changed for long-term investors in 2021

“During the surge in cases in the first and second waves of the pandemic, many families had no choice but to spend savings intended for education, marriage, and other major expenses on hospital bills. This made people realize the importance of health insurance. Now it is an element of personal finance; Before the pandemic, it was mainly used as a tax-saving strategy,” Ajinkya Kulkarni, co-founder of Wint Wealth, told FE Online.

Living with Covid-19: Keep the contingency fund ready

Despite the Delta wave in the first half of the year, the country remained open for most of the year. As we enter 2022, there is a growing risk of the new Omicron variant. The pandemic can end one of two ways, either we achieve “zero Covid-19” or the disease becomes a continuing part of the infectious disease.

Experts say that societies will have to adapt to living with Covid-19. Therefore, for any personal finance plan, having a contingency fund ready for emergencies is a necessity, now more than ever.

Volatile markets: wait, diversify investments

As the markets correct after hitting the highs and losses begin to loom, it becomes difficult to avoid making the emotional decision to cut these losses. This mistake can be detrimental to long-term wealth creation.

“Your first defense against these mistakes is to build a diversified portfolio across different asset classes that match your investment horizon and risk tolerance. In times of market volatility, while your risky investments (stocks (domestic/global)) may fall, the overall performance of the portfolio may not be as affected. A diversified portfolio built with complementary assets helps you smooth returns in volatile times and helps mitigate risk in the portfolio,” Kumarpal Jain, Associate Vice President of digital wealth platform Fintso, told FE Online.

READ ALSO | NFO Mutual Funds: Planning to Invest? Check if it is a good or bad idea.

Increased investable surplus for retail investors

With the economy gaining some sense of normalcy, 2021 saw the end of pay cuts in most industries.

“Coupled with working from home and recurring lockdowns, the common man was faced with an unusual situation: excess passive savings and limited avenues to spend. In 2021, retail participation grew at an exponential rate, the continued wave of the bull market is a testament to this,” said Kulkarni.

Demat accounts doubled in the last 3 years

A large part of the flow of this new increase in investable surplus saw its presence in the stock market. According to a recent SEBI report, the number of Demat account holders has more than doubled in the last three years, reaching Rs 7.38 crore as of 31st October. a ratio of approximately 76,510:1.

RBI opens sovereign debt market

The government launched runs batted in Retail Direct Gilt account that allows retail investors to invest directly in government bonds.

“Allowing retail investors to create accounts directly with the RBI rather than through a bank and providing a free service is a commendable move by the central bank. Previously, G-secs were only available to retail investors through traditional insurance plans or gilt mutual funds. The scheme received a lot of attention from NRIs as they found it to be a good safe debt option.

Avoid speculative bets; work for long term wealth

Some of the cryptocurrencies have seen a meteoric rise in its value in 2021 giving a lot of FOMO (fear of missing out). The temptation to create wealth in such a short time led many to consider investing in these digital currencies.

However, experts say that it is important to understand that cryptocurrencies are highly volatile.

READ ALSO | Investing in Commercial Real Estate: Pros and Cons, Tax Implications Explained

“Bitcoin, the leading cryptocurrency by market capitalization, hit an all-time high of $68,990 and soon after had a dramatic drop of around 32%, hitting a low of $46,584. Also, some of these digital currencies are highly vulnerable to government regulations and social media tweets. We believe it is in investors’ best interest to avoid such speculative bets and focus on their long-term wealth-building plan by increasing their investments when they have the opportunity to do so,” said Jain.

smart loan

According to the recent data released by the RBI, the total value of transactions made through credit cards exceeded Rs lakh crore in October 2021. Banks charge approximately 2.5-3.5% per month if You have not paid the outstanding amount in full. Therefore, in case you have any unpaid amounts, your priority should be to pay your credit card bills.

READ ALSO | Could Bitcoin be the new gold to fund your future this festival season?

“However, not all types of debt are bad. Borrowed money to buy a home or an education loan can help you build a long-term asset. The goal should be to borrow what is really needed and as little as possible,” said Jain.

Previous post Eurozone inflation reaches 7.5% as energy prices soar
Next post Markets will be looking for clues from the Fed going forward, as a historically strong month begins
%d bloggers like this: