Have you ever wondered why more and more individuals are obtaining insurance coverage presently or why a huge quantity of individuals are prepared to acquire their personal dwelling rather than live on rent? The Covid-19 pandemic has, in reality, actually changed our globe in more techniques than we could picture. It has impacted the way we believe, work, travel (or do not), study, communicate and devote funds.
Here we are taking a look at how the pandemic has changed some of our funds habits which will effect our lives going ahead.
1. Rapid adoption of contactless payment channels
The speedy adoption of contactless payment channels has been one of the most important life-style adjustments brought about by the pandemic. True, digital payments have been having preferred considerably prior to the outbreak of the feared illness. However, some of its channels, like UPI, have witnessed explosive development in the current months owing to the rapidly, secure, easy and contactless nature of the transactions. In reality, according to the National Payments Corporation of India information, UPI transactions grew to 2.21 billion in November final compared to 1.22 billion in November 2019 when the total transactions processed amounted to Rs 3,90,999 crore from Rs 1,89,229 crore 12 months back.
This is a welcome trend which is probably to continue in the future as effectively as more and more individuals would steadily move away from money transactions. This speedy development has also designed some details gap which has been exploited by scamsters. As such, individuals ought to get sensitized about how to use these sophisticated channels and physical exercise maximum caution to minimise losses owing to frauds.
That getting mentioned, the pandemic months witnessed a fall in credit and debit card usage mostly owing to the atmosphere of financial uncertainty which decreased consumption. However, as items have gradually began to normalise, card transactions are reaching pre-Covid levels. According to the RBI information, banks reported credit card transactions (at POS) worth Rs 50,139.67 crore in September 2020 compared to Rs 50,696.50 crore in March when the total quantity of outstanding credit cards at the finish of September 2020 stood at 58.69 million.
“It will be worthwhile to point out here that credit cards, when used smartly and responsibly, could be the most rewarding payment channel available in the market. And with the pandemic further enabling contactless application and use of credit cards, more and more people are likely to benefit from its features in the near future. Credit cards incentivise regular spends with benefits like cashback and reward points that help them save more, especially when the card benefits are aligned with their unique spending patterns and monthly budget for card spends. However, the total outstanding must be cleared in time every month to avoid interest charges that could offset any benefits earned and adversely impact the credit score of the user,” says Adhil Shetty, CEO, BankBazaar.com.
2. Growing enthusiasm to invest in direct equities
The pandemic dealt a heavy blow to the Indian economy which was marked by widespread revenue losses and spend-cuts. In such an uncertain circumstance, numerous individuals have been forced to rethink about their economic future. The ensuing lockdowns also meant individuals had more time in hand to reprioritise their economic objectives and fewer possibilities to devote on discretionary items. While numerous took this as an chance to increase their emergency money reserves, other folks bought or topped-up life and health-related insurance coverage policies to safe their family’s economic overall health in the face of an unexpected crisis.
Another fascinating trend was noticed in numerous individuals employing their absolutely free time to sign up for direct equity investments to develop their wealth taking benefit of the higher volatility in the markets which permitted discounted investment possibilities that could produce higher returns. In reality, Indian brokerages witnessed 24 lakh new demat accounts just involving April and June final year.
Smart and disciplined investments lie at the heart of wealth creation, and the increasing enthusiasm more than stock marketplace investments is certainly thrilling as equities have the prospective to produce good returns. However, they are also very risky in nature which calls for knowledge and a analysis-oriented strategy to reap wealthy dividends and minimise the probabilities of incurring heavy losses. Hence, amateur investors should devote time and work to have an understanding of the nitty-gritty of stock investments prior to taking the plunge. This incorporates having clarity about the numerous expense of investments and understanding basic and technical evaluation to capable to make independent and informed investment choices that are absolutely in line with their threat appetite, economic targets, liquidity and portfolio diversification specifications.
So, “before embarking upon your equities investment journey, ensure you have the necessary know-how by reading books and articles or enrolling for an online course. If you don’t possess the time and expertise to invest directly in stocks but don’t want to miss out on the investment opportunities either, you’ll be well-advised to consider investing in top-rated equity mutual funds instead where professional fund managers make critical investment decisions on behalf of investors to generate high returns, albeit with medium to high risk. You may get in touch with a certified investment advisor to help you make the right fund choices according to your returns expectations and risk appetite,” advises Shetty.
3. Homeownership gains preference more than renting
COVID-19 has polarized opinions on true estate like by no means prior to. As prior to, pro-renting advocates emphasize the arguments of flexibility, freedom of selection and decreased economic commitment. In the present time, they add that renting is noticed as the selection only for these who have lost their jobs or are in danger of performing so.
More than something, the safety linked with owning a physical asset through a coronavirus-like crisis coupled with increasing aversion to higher-threat investments is providing rise to improved demand for residential true estate acquire more than renting.
In a further trend noticed through Covid-19, numerous lengthy-standing tenants now favor to acquire a dwelling more than renting. The important issue figuring out this modify was the reality that numerous landlords/owners have been asking their tenants to vacate the house. This prompted impacted tenants who had the economic wherewithal to take into consideration obtaining their personal houses. This trend was in particular prevalent in the IT hubs Pune and Bangalore, and even in MMR.
Additionally, numerous tenants are increasingly seeing month-to-month rental outgo as a pure expense with additional positive aspects. Paying EMIs as SIPs to develop non-volatile asset such as true estate tends to make a lot more sense to them. They are additional encouraged by the less costly dwelling loan interest prices, which at the moment typical involving 6.85% and 7.5%. Once the present uncertainties such as spend cuts and even prospective job loss are resolved, they would favor to acquire houses.
“The rent-everything mindset of the Ola-Uber generation of millennials is also giving way in the post COVID-19 world. Homeownership has gained a lot of positive connotations for them in the current times. ANAROCK’s consumer sentiment survey conducted during the lockdown confirmed that millennials are, in fact, key housing demand drivers now. The prevailing uncertainties, stock market volatility, recent-past financial sector incidents and travel bans have brought about a change in the way millennials think. Out of the total participants in the sentiment survey who were in favour of real estate as an investment option, 55% were aged between 25 and 35 years – and 68% are end-users. In the previous edition of this survey, only 42% were in this age bracket,” says Prashant Thakur, Director & Head – Research, ANAROCK Property Consultants.
4. More individuals acquire insurance coverage
One current modify in customer behaviour has been that more and more individuals have began obtaining insurance coverage – each life and overall health – post the spread of Covid-19. For instance, the pandemic has produced everybody believe about their protection net. Millennials involving the age group of 22-35 years have greater assessment of their protection desires, when it comes to obtaining term covers which shields them adequately. As per information by Policybazaar, there has been a 40% Y-o-Y improve in term insurance coverage obtaining by the millennial generation. Data indicates that the proportion of term policies purchased by millennials with sum assured of Rs 50 lakh and beyond has more than doubled in the previous 5 years, surging from 20% to 42%. Meanwhile, the Rs 50+ lakh cover has today turn into the new mark for millennials, as practically 30% of them are going for this sum assured now.
“The data clearly depicts how millennials today have prioritized purchasing a bigger coverage to protect their family & dependents from any uncertainties. The latest trend of shifting preference towards buying policies with a higher sum assured is in sharp contrast to the millennial buying trends five years back, when Rs 15 lakh and Rs 20 lakh were the most sought-after term cover marks. Similarly, policies bought by salaried individuals hold the largest share of 75%. However, we are also experiencing an inclined growth in self-employed proportion i.e. 25% in 2020 viz a viz 20% in 2019. The changing trend clearly establishes how millennials today are wary of the risks and hence better understand the importance of a safety net,” says Tarun Mathur, CBO-Policybazaar.com.