Few money mistakes that you should avoid!
In the current crisis, many people have either lost their jobs or would be facing a salary cut. Such a situation has invoked a sense of anxiety, which often leads to poor decision-making. Therefore, at this point of time, do not panic or take any hasty money decisions that you might regret in future. In this article, we have listed down few money mistakes that you should avoid at such desperate times.
Equity is not for me!
Although as per AMFI’s monthly report, we have seen a strong increase in the inflows in equity mutual funds despite such a great fall in its assets under management (AUM). However, if in case, you are selling off your mutual funds quickly to restrict further loss then, you are losing the perfect opportunity to create wealth. Firstly, if you are taking this decision of moving out of equity now then, let me tell you, it’s too late. Besides, it makes a lot of sense to be in the equity rather than moving out. Rather, this is going to be a good time to be in equity. If you are a lump sum investor, then don’t redeem unless your financial goals are nearing or the fund you have invested no longer matched your intended objective. In case of systematic investment plan (SIP) as well, don’t stop the SIP. In fact, this is the time when you should consider increasing your SIP contributions.
EMI moratorium
Recently, RBI has provided guidelines to the banks to provide a three months moratorium on the loans. This means that you can defer your equated monthly installment (EMI) by three months. However, it makes sense not to opt for it unless you are hardly able to fulfil your basic needs. The catch in deferring the EMI payment is the interest. Although you would be relived from paying the EMI for three months but the interest on the loan would accrue for three months and would get added to your loan amount outstanding. Then you have two options, either pay an increased EMI for the remaining tenure or keep the existing EMI and increase the tenure. Therefore, if you have the ability to honour the EMI then, do not opt for EMI moratorium.
I will do it later!
When it comes to honouring the insurance premium, the situation would make you feel that it is not as important as fighting with the current situation. Therefore, many people might think of either not renewing the policy or just make it lapse. However, doing so, would create hindrance in their risk management activity. In the current scenario, honouring at least life and health insurance is recommended. Therefore, do not ignore these insurances.