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Making the downturn work for you

In a downturn, the possibility of lower income in the current year is a reality for many, but let’s not ignore the silver lining. A bit of rational thought can help you benefit even in these trying times. Here are three ways you can make the downturn work for you.

So much has changed as the world tries to minimise the damage of a Pandemic. In India, we are staring at an economic downturn in the coming months as the impact of a countrywide lockdown in commercial activity becomes clear. 
In a downturn, the possibility of lower income in the current year is a reality for many, but let’s not ignore the silver lining. A bit of rational thought can help you benefit even in these trying times. Here are three ways you can make the downturn work for you.

1. Time at hand, time for health

India doesn’t have a public health care system where the state takes care of medical expenses. This means that the onus of medical spending is on you. You may or may not have noticed but medical inflation or the rate at which costs increase in healthcare spending is higher than the average annual inflation in the economy.

Plus, as you grow older the costs only increase. Moreover, it’s not hospitalisation, but the expenditure on medicines which accumulates to become a lot. With time at hand thanks to a shutdown of mobility, focusing on improving nagging health issues can literally help you save money. Eat well and embrace a fitness routine for yourself and your family.

Money saved, is money earned. The less you have to worry about hospital and medicine related expenditure for your family, the more you will be able to increase your savings. You can use this to invest or fill up cashflow gaps that can show up in today’s uncertain times. 

While some of the lower spends are probably deferred expenditures, a lot of it is pure saving. At the end of the month, if you have more left in your bank account than you expected, invest it.

2. Invest your savings

We are all spending less as we stay home. There is less spent on entertainment like going for movie outings and dinners. There is practically no expenditure on fuel for cars and bikes. Even apparel shopping expenditure would have fallen as we don’t need to dress up much.

While some of the lower spends are probably deferred expenditures, a lot of it is pure saving. At the end of the month, if you have more left in your bank account than you expected, invest it. It doesn’t have to be an equity investment. Just take it out of your bank account and invest it in something that you know will grow your money. 

3. Clean up your portfolio 

You may have gotten anxious with the sharp fall in market value of your equity portfolio in March as the Nifty 50 fell 23% in that month, but come April, the same index was up 22%. The respite in market prices in equity assets is a chance to clean up your portfolio and get rid of stocks and funds which are of poor quality.

Any changes you would like to make, this is a good time to go ahead with it. It’s a good time to get an advisor to help out too and there as well if any changes are needed in the portfolio, then you can use this rebound in the market to get a fair exit in funds that were not working out and were not aligned to your long term goals. 

A slowdown doesn’t feel as good as the euphoric times when economic activity is up, but there is always something you can do to utilise the current market environment smartly with a positive impact. Saving and investing are the right choices at all points in time. 

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