COVID-19 impact on investment planning in India
New Delhi : Ever since the global outbreak of Covid-19, there have been reports of recession in the market, with a dramatic transformation in India's investment planning. 2020 has been a challenging year for people of all sectors – with increased deaths and uncertainties. Many companies have lost their business deals and have forced their employees to quit their job at this worst time.
Considering the current scenario, blessed are those who have secured their savings in an investment plan that provides an income source. It is also assumed that this pandemic would continue to have significant consequences in the foreseeable future. If you haven't purchased any investment plan, this is the right time to invest in diversified investment options to secure your family amidst possible hard times financially.
Diversified Investment Portfolio – The Right Investment Plan
A diversified investment portfolio means you invest in different types of investments to reduce risk and volatility. The more you work on creating a diversified investment portfolio, the higher the chance you will get considerable returns. When you spread your capital among different investment plans, you are cut shorting the risk of loss from one single asset class. That said, when you invest in debt and equity funds, then you can compensate for the loss from one asset with the profit earned from another asset.
Different types of investments include:
1. Unit Linked Insurance Plan (ULIPs)
2. Public Provident Funds (PPFs)
3. Post Office Monthly Income Plans (MIPs)
4. Mutual funds
5. Senior Citizen Savings Scheme (SCSS)
6. Tax Saving Fixed Deposits
7. Sovereign gold bonds
8. Life insurance
9. Real estate
10. Direct equity
Need For Investing In Diversified Investment Options
Portfolio diversification reduces your investment risk irrespective of the market condition. A typical investor looks to invest in an investment plan that provides high returns. But you never know what is yet to come in the future. A high-performing asset of today can be a low performing asset of tomorrow. With the sudden outbreak of the global crisis like Covid-19, several high performing assets have turned out to drastically lose their performance, resulting in a loss for investors. This is where diversification helps.
1. Minimizes the risk
2. Preserving capital
3. Benefits from different investment instruments
4. Helps achieve long-term investment goals
5. Benefits of compounding of interest
6. Offers peace of mind
Minimizes the risk
If you invest in different investment plans, the loss from one investment can be compensated with other investment options' profit.
Not all investors are at their young age of career. Many are close to retirement and may have goals oriented towards preserving their savings to enjoy them post-retirement. Hence diversification can help in securing their funds to ensure stability in the portfolio.
Benefits from different investment instruments
When investing in ULIP, investors gain the benefits of investing in a mix of debt and equity. Likewise, if you invest in fixed deposits, investors benefit from a fixed return and low risk. That being said, investing in various investment options will balance the loss and return associated with different funds.
Helps achieve long-term investment goals
An investor must invest in different high-performing investment plans. The market volatility can have a positive effect on the stocks and shares; hence the investor can generate high returns. If it positively impacts debt, then the investor can make the most out of mutual funds.
Benefits of compounding of interest
Selecting a diversified investment plan allows investors to enjoy the benefits of compounding interest. This means that every investment made will generate interest on the principal amount and the accumulated interest over the previous invested years.
Offers peace of mind
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Finally, securing your funds in different investment plans provide peace of mind. You need not worry about the investment risks and woes - no more stressing about the portfolio's performance with diversified investment options.
Covid-19 has not just taken the lives of many but has also shattered the Indian economy. With the economic crisis escalating daily due to the global pandemic, it is advised that you take measures to protect your family and loved ones before you ed with no income source.
What else can be more peaceful than knowing that you and your family are financially secured amidst any uneven crisis? By investing in different plans, you can achieve smoother and stable investment returns over the long term. Investment plans provide wealth accumulation opportunities through market-linked returns. Simultaneously, investment in life insurance plans like term plan and ULIPs also offer tax benefits under Section 80C and 10(10D) of the Income Tax Act 1961. Both the premium paid and insurance benefit payable can help you save taxes.