- Date : 25/06/2021
- Read: 4 mins
Find out how to reduce your investment amount to accommodate current needs while ensuring your future goals do not get hampered.

The pandemic has caused a lot of financial havoc, forcing people to reduce expenditure on essential items, white goods, leisure, etc. Several people have been left jobless, with no source of regular income. Things have become so stretched that some investors have been forced to re-examine their monthly investment plan strategies as they no longer have the money to invest for the future.
Given the current situation, it may seem advisable to prioritise the present over the future. However, do not make these mistakes in the process.
- Do not cut down on your health cover: Health insurance in the present circumstances has become a priority. COVID has impacted millions of people, regardless of their age or previous health conditions. The virus has also resulted in many long-term health complications, such as lung and heart disorders. Hence, cutting down on health insurance at this time can lead to higher costs later. Hospitalisation and medicines can leave a considerable dent in one’s finances. Therefore, regardless of the premium amount, make sure you don’t compromise on your health plan.
- Do not surrender your life insurance: Life can be uncertain, which is why keeping your family’s security in mind at all times is essential. A life insurance plan can offer assured returns to your loved ones in your absence. Life insurance plans, such as a guaranteed monthly income plan, can also offer insurance as well as safe investment opportunities.
- Do not stop investing altogether: If you find yourself in a position where your employer cuts your salary due to the ongoing economic crisis, you can still continue with the 20-30-50 rule, where you save or invest 20% of your salary each month. You can set a limit for the minimum amount to invest in mutual funds by following the same percentage. This can help you accommodate other expenses.
- Do not splurge on non-essentials: Try to build assets that can appreciate over time. Avoid spending on depreciating assets at this point, such as a car. Keep in mind that the value of a car will reduce over time. But if you invest the same money in a mutual fund or park it in a retirement account, your money will grow and offer high returns over time. So, prioritise your expenditure and do not splurge on unnecessary items right now.
Related: Investing on a budget: How to invest with a monthly salary of Rs 50,000
Things to do
- Invest in low-risk stocks of companies: The pandemic situation has contributed to an under-performing economy and disrupted the market. Stock market volatility has been at an all-time high. Hence, it is all right to cut back a little if your risk appetite does not allow you to invest large sums of money. However, instead of not investing at all, fix a monthly minimum amount to invest in the share market. This will allow you to capitalise on market opportunities without putting a huge burden on your shoulders. It may also be a good time to shift your focus from high-risk stocks and start investing your money in safer instruments such as Public Provident Fund (PPF), National Pension Scheme (NPS), fixed deposit, etc.
- Move from equities to debt: Equity funds can offer high returns, but they also come with high risk. In times of such uncertainty, it is justified to reduce your investments in equities. However, instead of putting a complete stop to your investments, you can use the money to invest in debt funds instead. For instance, if you cannot invest Rs 10,000 in equity funds, try to invest Rs 5000 in debt funds or fixed income funds.
- Pay attention to your current and future needs: Remember that a mutual fund can offer higher returns than a savings account. If you park your money in a bank savings account, you can earn a meagre 4%–6% interest in a year. If you invest the same amount in mutual funds, you can earn double or more interest in the same time frame. Note that investing does not always have to be risky. You can adjust your risk appetite and choose a suitable investment option as per your requirements.
Related: Where and how do millennials invest?
Last words
Having a sound investment plan may be more important at a time like this. So, do not just stop investing. As an alternative, try to invest in better instruments that come with low risk and guarantee assured returns. 6 Practical strategies to help reduce investment risk