An emergency fund is now considered underestimated, it was previously one of the most overrated financial tools. Our parents used to set aside a certain amount of their earnings as an emergency fund. There are a number of reasons why an emergency fund is important, but a medical emergency is one of the most compelling reasons to put money aside for an emergency fund. When you’re already struggling with a medical problem, having an emergency fund can relieve a lot of stress. Due to all sick days, there may be reduced pay or no pay. Accordingly, an emergency fund can help in such a situation. In addition, in the event of a financial crisis, emergency funds could be of great help. This will relieve the stress of skipping bills while still allowing you to focus on your monthly budget.
Insurance penetration in India is low, especially for general insurance, which includes coverage for civil liability, motor vehicles, property and health. However, it is essential that more people take out general insurance. The risk of illness, accidents, catastrophes and lawsuits is reduced by a well-developed general insurance market. The IMF recognized low insurance penetration as a critical sector issue in its April 2018 technical paper on insurance sector regulation and supervision. Moreover, in India, an ordinary person spends a lot on medical expenses. Having health insurance could be controlled.
Mutual fund investment
This might surprise most of you. However, this is true in India. Due to the system we have in India, this claim is only half correct. India has always been a market for tangible assets like gold, currency and real estate. The financialization of savings, especially mutual fund investments, has been popular in India over the past five years. Due to the dangers inherent in volatility and lack of market knowledge, Indians are not very good at stocks. Each month, the MF receives nearly one crore of investment, mainly through the SIP channel. However, MFs have been underestimated in India, but that could change in the next ten years as one can expect exponential growth of this sector, with great interest from the government.
According to the PGIM Retirement Readiness Survey 2020, the majority of Indians do not have a retirement plan in place. PGIM conducted a survey in February 2020 to see if Indians are saving for their golden years. It can be expensive to grow old. In India, the majority of people after retirement depend on their children, while only a few between 1/3 and 1/4 plan for retirement. Retirement funds are an important financial product because over time expenses increase and it is not advisable to depend on children or anyone else. The future is uncertain, medical expenses will only increase, despite the fact that frivolous spending may decrease. When inflation is factored in, not having enough money to cover future needs can be stressful and worrying. The goal of an investment strategy for retirement is to achieve financial independence in your later years without depending on others.