Due to the recent unpredicted changes in the general conditions of the whole world, buying stocks isn’t that attractive anymore nowadays. The stocks are fluctuating more than ever due to this COVID situation. People are looking forward to a safer and mainstream way of investing their money, among all of which, fixed deposits are the disputed king. We don’t know when this pandemic situation would improve, and subsequently, the big ups and downs in the stock market would reduce.
Both the central and the state governments are trying their best to stabilize the economy, but the decisions taken by them aren’t enough, and according to CMIE, the organization which monitors data related to developments in the Indian economy, India is Suffering close to a 20% change in the market scenario, which is massive considering the size of Indian economy. These shifts and graphs and the subsequent economic reactions are going to affect the financial security of millions of people. Fixed Deposit is considered to be the best form of investment and through that we can get a reasonable fixed deposit interest rate which is considered to be effective for many people.
People often neglect the importance of having an emergency fund. Due to this covid situation, almost all companies are facing loss and therefore are terminating or reducing the pay cut of their employees. Times like these are when a person requires immediate emergency funds.
What are the solutions & conditions which should be satisfied by an emergency fund?
First of all, an emergency fund should offer security. Having an emergency fund doesn’t mean that you would have to keep that somewhere where it is locked in a safe. You can keep the emergency fund in a bank account too( preferably in a fixed deposit). Fixed deposit since long had been an emergency fund for many people for a long time. Also, make sure that your emergency fund should have decent growth as well as good liquidity. Emergency funds should be easily and quickly accessible.
Let’s Take a Look at Some Of The Best Options We Have At The Current Time:
1. Savings Account
A savings account can be a major source of liquid cash whenever we require it. Also, you can manage or move it quickly with the help of a mobile app of the bank you use or internet banking. It is advised that one should always invest in a fixed deposit which has the same liquidity as keeping them without a fixed deposit. In addition to that, a fixed deposit provides a higher interest rate than just keeping it in the account. Therefore it’s a Win-Win situation. It will only take around 5 minutes to access the emergency funds, and it’s extremely easier & simpler than all other options.
2. Gold
This requires a little market knowledge about gold. Gold prices highly depend on economic conditions. But it’s for sure that there would always be a good value for gold in the market. Investing in gold and keeping them as an emergency fund is a smart financial decision. Not only in today’s time, but our ancestors also used to keep gold as a reserve fund and use it( it by selling it) in the time of crisis. You should always be wary about the gold price trends. In recent times it’s skyrocketed, but if you had purchased gold from a time when the gold price wasn’t this much high, you made a smart decision. You can not only sell those gold you bought earlier to satisfy the financial crisis in times of emergency, but also gold is a good investment as its graph is never on a steep downward slope.
3. Gilt Funds
People are nowadays investing more and more in these schemes as these come with almost close to zero risks and therefore are considered one of the safest ways of maintaining an emergency fund. Nowadays, schemes like these are trending among people due to the recent recession and unpredictability of the market.
Both the government and RBI are trying very hard to stabilize the economy. Reserve Bank of India is trying to reduce Repo rates which subsequently results in lowering of fixed deposit rates. Most banks are nowadays offering in a range of 4 to 6% on a fixed deposit scheme. Some banks are also offering fixed deposit rates which are lower than saving accounts interest rates. RBI is doing all this to boost the economy.
In the current market per interest rates are in a downward slope investing in gilt funds is a smarter choice.
