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Importance of having an emergency fund amid coronavirus

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Amid the coronavirus pandemic, countries are trying to curb the virus from spreading at a massive level and seeking ways to tackle the crumbling economy and it’s subsequent impact worldwide. India was on the road to recovery from the prevailing economic slowdown when the pandemic hit the nation, tumbling to a critical condition. 

With the government enforcing the country’s lockdown in stages, major industries like tourism, aviation, hospitality, etc., have witnessed their worst quarter. Struggling to cope with the consequences of the coronavirus, most businesses have initiated layoffs or given only a percentage of the salary to their employees. 

The need for an emergency fund

Financial experts have persistently professed the importance of having an emergency fund. The underlying need for it includes absorbing investment losses or having surplus money in the event of unpredictable and unruly circumstances like that of the present. Due to the ongoing pandemic, investors who have secured their funds in market-linked investments such as equity have lost a major chunk of their wealth and possibly jeopardized their financial future. 

Having an emergency fund, made up of smart and systematic investments that aren’t market-linked can prove vital for an individual during adverse economic situations. Amid the spread of coronavirus and the crumbling financial market, people looking to create an emergency fund can look towards P2P lending as a safe investment option. 

Leveraging RupeeCircle to create a comprehensive emergency fund

RupeeCircle is an innovative P2P lending and borrowing platform which can help create a comprehensive emergency fund through its following features: 

Liquidity: Through RupeeCircle’s P2P platform, investors can set goal-based liquidity without any lock-in period. By analyzing their financial goals, people can choose to lend money to borrowers for as low as 90 days. Therefore, in the event of a financial emergency, the liquid cash is available as per their need.

Monthly returns: Irrespective of the prevailing market condition, RupeeCircle investors are provided with systematic monthly returns on the amount lent to borrowers. What the borrowers pay as the interest on the loan, is credited directly to the account of the investors, further generating an alternate source of income. 

Transparency: It is essential that an emergency fund is transparent in its approach, structure, and process. RupeeCircle, backed by advanced technology, ensures a transparent and fair investment structure, where the investors have clarity on the list of borrowers, investments and the process of investing.  

Diversification: An emergency fund must safeguard investments by the way of perspective diversification. Although RupeeCircle’s inventive credit analysis eliminates the chance of loan default, investors can diversify their investments within the platform. They can divide their investment among multiple borrowers to increase their profits and equalize minor losses if any. 

Currently, almost every industry is suffering due to the Coronavirus. Furthermore, a global recession has latched on to the world’s economy. For investors who have lost years of their wealth and those aspiring to ensure a secure financial future amid the current pandemic, the time is now to create a diversified emergency fund through a P2P lending platform such as RupeeCircle. Ideally, a P2P fund will reward higher returns than other debt products such as Fixed Deposits, PPF, etc., thus, helping you glide through a financial rough patch. 

 

This article is authored by Nikhil Prabhakar, Head of Marketing & Products at RupeeCircle. He is an alumnus of IIM Ahmedabad & ESCP Paris and has 10+ years of work experience across multiple industries like Fintech, IT & Energy. He is an active investor across equity, derivatives, debt and real estate.

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