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Eggs in one basket

Do not put all your eggs in one basket

A crucial lesson for people was not to put all their eggs in one basket, but to diversify their investment portfolio.

Fear of losing money is one of the reasons that people may be wary of investing but putting your money into different investments (your imaginary eggs going into a series of baskets) can help reduce some of the risk.

In technical terms, this is called diversification. It just means spreading your money into different investments, such as equities, bonds, cash, and property.

“The first priority has to be maintaining enough liquidity in the form of cash or readily redeemable securities/assets, such as liquid mutual funds, which is enough to cover basic living expenses for at least six months.

Many professionals lost their jobs due to COVID-19 related business uncertainty and faced financial hardships. Simultaneously, the massive crash in equity markets between March and April, and the subsequent, far more spectacular rebound has reinforced the time-tested principle of sticking to a long-term financial planning and investment roadmap, such as by investing in mutual funds through SIPs.