On November 8, 2016, Indian Government scrapped 500 and 1000 rupees notes from the country to discourage culmination of black money in the country. Although this step was a revolutionary one, it financially impacted the Indian population to a large extent and taught some of the important lessons to all of us on how to properly take care of finances to meet emergency situations like Demonetization.
Savings Are Possible
One of the important lessons Demonetization taught us is that curbing expense and doing savings during an emergency is possible. If you can bring this logic into practice in, you can look for good investment options and grow your wealth. Also, it is possible to invest in various investments and life insurance online. Therefore, you can maintain your wealth confidential while you safeguard your family’s future.
Plan Your Investment Portfolio
To handle the unexpected circumstances and still fetch good returns, your investment portfolio must not only be limited either to physical assets or financial assets. The portfolio must be a good amalgamation of both physical and financial assets. If you plan to invest heavily in physical assets like real estate sector (which is relatively liquid in nature), you might regret this expensive decision of yours in situations like Demonetization.
Start Accepting Technology
Demonetization was a major step towards making India digital. People must now start accepting technology as their ally rather than an enemy. In India factors like social habits, literacy level, economic strata etc. makes any new change hard to exist. Demonetization encouraged people to switch over online when there was a short supply of currency. From the lowest level to the most educated society, everyone was found receiving and making payments through mobile wallets and internet. Investments in financial instruments like health policies, mutual funds, and online life insurance have also gained popularity.
Many times, it has been observed that people are unable to receive proper medical care due to lack of sufficient funds. Hospitalization and medical expenses can be very high for the treatment of heart ailments and other critical diseases. Investing in health insurance coverage for you and your family members will be a wise decision to receive uninterrupted medical attention and to avail cashless payments facilities during situations like Demonetization.
Plan Your Liquidity Needs
People must invest in various options after giving due consideration to their own liquidity requirement. It is crucial to have an emergency fund which must be equivalent to at least 3 months’ worth of living expenses. They must not invest in a sporadic manner and should maintain funds in investment for at least six months which could be accessible in days’ notice along with yielding results better than saving bank accounts. They could invest in fixed deposits; mutual funds etc. after considering their tax implications.
Save Tax Not Evade Tax
The whole demonetization phenomenon was based on the objective of flushing out the black money. In other words, towards the destruction of a parallel cash economy, which had been spiralling out of control. The reason for such economy had been the people who were reluctant to declare their income and pay taxes used cash to evade tax.
The key to a safe financial future, however, is not evasion but an investment. You don’t need to evade tax when you have numerous investments like, life insurance, ULIPs, mutual funds etc. to invest and secure your future. Investments that not only save tax for you but also meet your life goals:
- Pension plans for retirement goals
- ULIPs/ELSS for Long-term Wealth generation
- Life Insurance Plans for securing lives
- Child plans to safeguard your children’s future financially
Understand that tax evasion is not a solution to achieve long-term financial goals. Proper planning is required to pay your taxes well and on-time. They can invest post-tax income into some good financial instruments to meet their financial goals over a period of time. Investment in wealth plans and life insurance online brings several direct tax benefits in the form of premiums paid by the insurance policyholders.