6 Things the Lockdown Taught Me About Investing.

The global COVID-19 pandemic and the subsequent lockdowns all around the world have not only completely disrupted the way we lead our lives but have also taught us a lot about what we should and shouldn't be doing.

As an earning member of society and someone who wants to secure his future and that of his loved ones, the lockdown of 2020 has taught me a lot about investing my money, and thus in today's post, I will be sharing them with you.

Let's get started.

1.Our Income Isn't Guaranteed

One of the first and most important things I learned during this lockdown is the stark realisation of the fact that our future income isn't at all guaranteed. We have all heard statements like, "don't take things for granted," but we often fail to realize that these exist for a reason, and this lockdown was living proof of that.

As the modern economy was pushed into the realms of a global recession, millions of people suffered from job loss and unemployment, leading them to either lose full or partial income.

Thus, it is important to understand and acknowledge the fact that although today, all of us might have handsome incomes, tomorrow might not be the same, and thus we need to secure our futures above everything else. And one of the most effective ways to secure our futures is by investing, and we need to start the process today.

2.Our Investments Can Suffer Losses

Although some of us might have invested in the future, another realisation the lockdown put to the forefront is the fact that even our best investments can suffer drastic losses. Despite the fact that almost all of us have read the statement "investments are subject to market risks," we often fail to acknowledge that when the global market goes down, our investments go along with it.

Thousands of investors around the world saw their investments suffering heavy losses during the lockdown, mainly due to the fact that consumer demand for certain products went down, and this is proof that all of us need to have an appetite for suffering loss.

Thus moving ahead, make sure that every time you invest your money, take into consideration that there is a risk involved in it.

3. Don't Put All Your Eggs in One Basket

One common ideology shared by the entire investor fraternity is that you should never put all your eggs in one basket, and this was further solidified in this lockdown. While it is true that the consumer demand for certain products went down, alongside it, the demand for other items such as tissue papers, toilet papers, sanitiser, and others went up drastically.

Those of us who had made the smart decision of having a diverse portfolio not only suffered fewer losses, but in some cases even generated handsome profits, but on the other hand, those who had invested their life savings into one or two standard portfolios saw their savings disappear in front of their eyes.

Thus, moving ahead, always remember never to put all your eggs in one basket.

4.Emergency and Contingency Fund

If you have been in the investing circle for some time now, chances are that you have created an emergency fund. But most of us fail to realize the fact that emergencies don't only arrive in the form of medical expenses but also in the form of sudden unemployment or partial loss of income.

There is a reason why the emergency fund model mandates that you secure enough funds to create a runway for at least 6 to 8 months, and this lockdown was proof of that. Originally, the lockdown was scheduled to last for just one month, but in the days that followed, it got extended beyond our predictions.

Thus, if you have still not created an emergency fund for yourself, start today and make sure that you build a runway for at least 6 to 8 months, such that in case of an emergency, you can support yourself and your loved ones. Along with that, make sure that the amount you keep aside will cover all your expenses ranging from your EMIs all the way up to your daily expenses.

5.Get Insured

Sadly, unlike other leading nations around the globe, having medical and life insurance isn't a mandate in India, despite the fact that both mortality and cost of medical procedures are constantly on the rise. Along with this, a common thought among most investors is that they do not require insurance, as in even the worst of cases, their investments will be enough.

While this thought is true in an ideal scenario, as we all realized, 2020 was anything but ideal. Having good medical insurance and life insurance for both you and your loved ones alongside your portfolio of investments can prove to be a lifesaver in such testing times, mainly due to the fact that most of our investments don't offer instant liquidity because of their long term nature.

Thus, make sure you go ahead and get good medical and life insurance for you and your family members today.

6.Save, Save and Save More

As a society, most of us collectively focus on instant gratification rather than long-term success, and this is demonstrated in our daily spending behaviors. If you have a handsome income today, and you are given the option between buying a new pair of shoes or buying a new share, chances are that you will choose the new pair of shoes. But during the entirety of this lockdown, all our materialistic pleasures were locked along with us, and the worst part is, they constantly underwent depreciation, which means that the new phone you bought in January is probably worth less than half of the price you originally paid for it.

Thus the next time you think of purchasing a new item that you necessarily do not require, just ask yourself what will be better equipped in securing your future, the item, or saving the money.

Ending Lines

2020 has been a tough year for all of us, and although it is true that some of us might have made wrong investment decisions in the past, now is the time to start from scratch and fix them, because as a great man once said, the best day to start investing was yesterday and the second-best day is today.

All the best, and stay safe.