Coming to 2020 , the entire year was full of virus ,death, quarantine ,lockdown ,testing and vaccine…..
Loss of job , economic turmoil all happened due to this virus.
Well, almost. There are time-tested lessons in personal finance which have been staying relevant for ages, but often not well understood or realized as certain things are learnt well in tough times only. And 2020 was indeed a tough year to forget soon. lessons for lifetime are as follows:
- Trying to predict the future (of market, or for that matter of anything) is the stupidest thing to do.
- Having no health insurance, depending solely on employer provided health cover or having a health cover of less than sufficient amount with never read terms and conditions – are as good as inviting the worse to happen.
- Spending as much as if there is no tomorrow and delaying savings as if the future will always be kind to us – can be a catastrophe.
- Making ad hoc investments without any plan whatsoever may also land us in trouble such as not being able to liquidate investments when required.
- Assuming that the party (source of income) will go on forever like as before – is going to fall flat sooner or later. That does not mean we should panic; that means we should remain prepared.
- Need of asset allocation in one’s portfolio: We have discussed this in length several times. As not all assets out-perform or under-perform at the same time, it makes lot of sense to invest in assets which are negatively correlated to each other. The more this allocation is process-oriented and automated, the better.
- Need of having an emergency fund: Yes, this doesn’t sound attractive at start, but can come real handy when everything else go wrong.
- Need of adapting to changes: Here, by ‘changes’ I mean ‘technological changes’. Things have already changed and are going to change very fast – technologically. And for most part, it is for our benefit. The sooner we get comfortable in using technology in our day-to-day life, the better. Technology has made managing investments and insurance much more convenient and safer in the year 2020.