Amidst everything being written and said about frugal people, one thing that separates them from others is common sense. You will never see any prudent (or risk-averse) individual be frivolous with his or her money.
Instead of spending the money on extravagant parties and meaningless possessions, a frugal person will wait for the right opportunity before opening their wallet.
Therefore, if you are a risk-averse individual and like to play it close to the chest, here are a few low-risk instruments that can offer you financial stability. Take a look.
1. Creating an Emergency Fund
Setting up a rainy-day fund is something that would appeal to individuals, who put a value on their money. While many people fail to see how emergency funds would go hand in hand with their financial planning, these present a suitable investment opportunity for risk-averse investors.
An emergency fund enables you to take care of unexpected expenses such as car or house repairs, without delving into your savings purse. Thus, it is crucial to start early with your emergency corpus.
Start small by setting aside a portion of your income each month for a period of 3 to 4 months, after which you may look to increase your fund contribution.
This way, even if you choose to switch jobs or venture into entrepreneurship, you will be financially prepared to take care of household expenses.
2. Investing in a Medical Insurance Policy
Purchasing a medical insurance policy is something you must do regardless of whether you are a risk-averse investor, or you think that you don’t need it.
With a health insurance policy in your kitty, you can avail full financial coverage in case of sudden medical treatment and hospitalisation. This way, you can go for the best possible course of treatment without burning a hole in your pocket.
The earlier you invest in a medical insurance policy, the more you will save on the payable premiums and other policy benefits.
Buying a medical insurance policy from reputed insurer can provide you with many benefits, like coverage for pre and post-hospitalization expenses, medications, OPD visits, and tests amongst others.
3. Secure Your Family with A Term Cover
Nothing gives more happiness than seeing your loved ones achieve milestones in their life and being there to celebrate the special moments in life. You are the shining beacon for your family members, providing for their every single need.
This also implies that your loved ones are dependent on you for emotional and financial support at all times. In any situation when you are not there with your family; therefore, it is possible that they won’t have any other financial support mechanism.
To avoid any such eventuality, you must purchase a term insurance plan as early as possible. Term cover plans are essentially pure life insurance products that offer a significant amount of money to your family after your untimely demise.
In this way, your family will have an adequate form of financial security and would continue to achieve their dreams, even in your absence.
Another standout feature of these plans is that their premium is much lower than any other insurance product.
You also receive comprehensive tax benefits under Section 80C, and 10 (10D) along with the option to add accidental disability and critical illnesses cover benefit.
Successful Investments are All About Maximising Profits and Mitigating Risk
If somebody calls you a frugal, say ‘thank you’ to them and move on because they cannot see your real potential. What would appear to others as prudent behaviour, is actually a street-smart way of managing finances.
Individuals who have been prudent or economical, do not believe in splurging their savings on trivial pursuits. Instead, they utilise their money to safeguard their most prized assets.
Thus, you must ensure that your assets remain protected at all times. You need to invest your earnings into certain crucial instruments such as medical insurance and emergency funds.
Doing so will not only keep you relatively stress-free throughout your life but protect your family’s interests too.
Disclaimer – The information contained in this blog post is offered for education purposes only.