How to deal with your biggest financial fears

If you have no investing expertise or have suffered losses and are afraid you will do so again, the best option is to not invest directly through stocks, but via mutual funds. Find out how to conquer your fears and secure your finances

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Nearly 51% Indians fear they will run out of money in retirement.
Most people are worried about their financial well-being at all times, not just during market volatility.

Find out how to conquer your fears and secure your finances.

1. ‘I will lose all my money in the stock market, especially during volatility’

This is probably the most common financial fear, especially among the new, inexperienced or financially illiterate investors. It is also true of someone who has lost a significant amount in market turbulence earlier. This is likely to instil a deep-rooted fear of market losses.

How to deal with it: If you have no investing expertise or have suffered losses and are afraid you will do so again, the best option is to not invest directly through stocks, but via mutual funds. If you do want to trade in shares, do not follow tips from friends and family blindly. Either educate yourself by reading up on the subject or take the help of a professional like a financial adviser. A good suggestion is to invest for the long term and not be influenced by short-term market churning.

2. ‘I will not have enough money in retirement and may be dependent on my kids’
Nearly 51% Indians fear they will run out of money in retirement, with seven out of 10 expecting their children to support them, says the HSBC Future of Retirement Study 2018. This, even as 55% working Indians are saving for retirement compared with 39% globally, according to the Aegon Retirement Readiness Index.

How to deal with it: If you, too, are plagued by this fear, start by saving a larger part of your income by cutting down on non-essential spends. Also check if you are investing in the right avenues so that your corpus is growing at the right pace. Take the help of a financial adviser, if necessary. Push back your retirement by looking for additional sources of income and supplementing your existing income.

3. ‘I will lose my job
If you are worried about job loss, you have either come across clear indicators from your boss or colleagues, or have witnessed recent job losses in your company, industry or sector. In either case, you need to be proactive about overcoming this fear.

How to deal with it: Be honest with yourself and check if the reason for fear is your own poor performance. If yes, talk to your boss and find out ways to improve or upskill yourself. If the reason is beyond your control, such as cost-cutting measures or poor industry performance, you will either have to make yourself indispensable by learning niche skills and multitasking, or start looking for a new job without waiting for the slashing. Of course, maintaining an emergency corpus helps.

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4. ‘I will never be able to clear my debts’
The fear of falling into a debt trap is often overcome by the temptation to buy things on credit. This results in several loans, some of which may be for the long term with large EMIs. This is likely to induce fear of never emerging from the huge debt.

How to deal with it: The best way of keeping this fear at bay is to ensure that all your loans don’t comprise more than 40-50% of your income. If you have already taken a large debt, do not take more loans and prepare a plan to repay the existing loans. Start with the most expensive debt like a credit card bill or a personal loan, and then clear car and education loans. If you are uncomfortable with the idea of a long loan tenure as in the case of a home loan, try to prepay it at the earliest. If, however, you want to avail of the tax benefit, retain it but never miss an EMI.
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5. ‘I won’t be able to handle a health emergency’
The fear of wiping out one’s savings in a medical emergency is very real given the high cost of hospitalisation and medical care. This is especially true in case of critical illnesses and accidental injuries. In several cases, even basic health insurance may prove inadequate.

How to deal with it: The best way to deal with health emergencies is to insure oneself. Buy a small basic health plan of, say, Rs 5 lakh and get a bigger top-up plan of, say, Rs 15 lakh with a deductible of Rs 5 lakh. This will be cheaper than a single, large health cover of Rs 20 lakh. The other option is to create a financial buffer to supplement your basic health plan. It is equally important to buy critical illness and accident disability insurance plans to boost your financial ability to deal with medical emergencies.

6. ‘I will never get my documents in order’
Introducing errors in tax returns or not filing them on time, not preparing a will or disposing of assets, not renewing policies, or not filing important documents properly are among the biggest fears, but ones that are spoken about the least.

How to deal with it: Fortunately, this fear is easily taken care of by preparing a schedule and following it diligently. Maintain a separate diary, listing all the important documents as well as the deadlines for filing, renewing or paying premiums. Fix dates, set alarms and automate payments to allay your fears of missing deadlines. To avoid errors in filing tax return or making a will, it is best to take the help of professionals.
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