Striking the right balance: How to navigate your financial growth amidst uncertain times?


Indian economy has been a shining star on the global stage amidst a peer group witnessing a slow to no growth rate. The World Bank, in its latest India Development Update, highlighted the Indian economy’s “resilience” despite challenges in the global environment. The economic outlook is promising on the domestic level in the coming year. The US recession is the talk of the town, and so the world is gearing up for the challenges we may encounter in the coming year. 

The environment is too dynamic as the climate policy changes can play a major role in planning our year ahead. Not to forget the ongoing geopolitical tensions that will also continue in the coming year. 2024 marks an election year not only for India but also for the world’s largest economy, i.e. the USA. 

Add to that high-interest rates and stubborn inflation. It’s time that we get ready for the challenges we can have at an individual level. Navigating your financial growth at a macroeconomic level in times of heightened uncertainties can be challenging for individuals. Hence, individual resilience and a mindful approach to personal financial management will be essential for achieving one’s financial goals.

In this article, we will be discussing how you can make sure that you are ready for times of uncertainty.

Create and maintain an emergency fund

Make sure that you have at least six months’ worth of living expenses. An emergency fund provides a safety net during uncertain circumstances. It allows you to navigate unexpected challenges without compromising your overall financial stability.

For building an emergency fund, you can keep in mind the 10:20:70 method, which says,

  • Keep 10% cash in hand.
  • Keep 20% of your money in your liquid assets (Banks are currently offering 3.5% – 6% interest rates on savings accounts. Other options could also include a high interest earning deposits with no lock-in period.)
  • Keep 70% of your money in some liquid mutual funds or some short-term investments.

Diversify your investments

Like they say, don’t put all your eggs in the same basket. In times of emergencies, your investments become your best friend. But remember to build a well-diversified investment portfolio across various asset classes, such as stocks, real estate, and alternative investments. Diversification helps spread risk and ensures that your portfolio is resilient to market fluctuations, enhancing your chances of long-term growth.

Managing outstanding payments

Prioritise and manage debts strategically. Focus on paying off the high-interest balances first. Consider refinancing options for favourable terms and avoid accumulating unnecessary or more outstanding balances.

Regular financial check-ups

Regularly review your financial plan to assess its effectiveness and make necessary adjustments. Life circumstances, economic conditions, and personal goals can change, and your financial plan should evolve accordingly to stay aligned with your aspirations. Keep a constant check on your credit report. Checking your credit report once a month is a healthy habit.

Upskilling and adding a source of passive income

In these uncertain and volatile times, where job losses and business closures are potential challenges, it’s wise to not only develop a secondary source of income, through fixed-income investments but also to invest in upskilling yourself. By enhancing your skills, whether through acquiring digital proficiency, learning new languages, or gaining expertise in emerging technologies, you will increase your resilience in the job market as well as open doors to new opportunities. This dual approach of securing additional income and continually improving your skill set can ensure financial stability and professional prospects in uncertain circumstances.

In a world of uncertainties, navigating these crossroads demands a savvy and adaptable approach. Diversifying investments, staying informed about global shifts, and having patience in the face of economic slowdowns are key.

Gaurav Chopra, Founder & CEO of IndiaLends

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint.
Download The Mint News App to get Daily Market Updates.

More
Less

Published: 28 Dec 2023, 03:34 PM IST



Source link

Leave a Comment