This week in personal finance: Money lessons from Lehman crisis; tips for personal loan, retirement and more

Saturday, September 15, 2018, marks exactly 10 years since the Global Financial Crisis of 2008 was triggered off by the collapse of Lehman Brothers. What followed the collapse was the worst financial crisis that the world had seen since the Great Depression of the 30s.

While numerous banks and other institutions collapsed in the wake of the tsunami of wreckage caused by the global financial crisis, investors too were caught in a mess with stock markets across the globe melting down and their investment value shrinking reducing many to poverty.

Financial markets are fragile and have hidden risks that many investors never realise when the going is good as it is today. The US stock markets – Dow and Nasdaq – are once again at their lifetime highs, while stock indices in India too reached their record high recently before receding a bit. Investor wealth has been growing.

However, amid all this euphoria one should not turn a blind eye to the risks and invest recklessly. Otherwise, there is always a risk of getting caught on the wrong foot if the tide turns or another meltdown happens which cannot be ruled out ever.

The global financial crisis opened the eyes of investors about some several basic lessons which remain valid at any point for the investing community. Among these are never to invest borrowed money and to keep your portfolio diversified across assets.  In our story, we remind investors of the few broad lessons that the crisis taught investors. Adhering to these can lead to wealth creation in the long term as well as minimise risks.

One of the products in the market that should be sparingly used are personal loans which come with heavy costs associated on the borrowers. Personal loans come in handy during a financial crunch whether it be for unexpected expense during a wedding, renovation to your house, unfunded medical exigencies or debt restructuring.

Since a personal loan comes with heavy interest rates, it is always advisable to take a personal loan only when you are in urgent need of some money and not as a means to fulfill your wants. Here are few things to check before availing a personal loan:

Interest rates in the system has been rising. This can lead to lenders raising the rates on your floating home loan which could lead to higher EMI payments. However, when the intimation of such hike is communicated to the borrower it often leads to disrupting their monthly finances.

Many a times, borrowers find it difficult to pay the increased amount of EMI (equated monthly instalment) and hence, look for reducing the rate of interest by transferring their loan to some other lender. If you, too, are contemplating switching your home loan to a new lender, here are a few factors you should consider.

A bouquet of insurance covers has become a must have in everyone’s financial portfolio. Besides life insurance, one needs to have a health cover or a motor insurance in case one owns a vehicle. There are some more policies that are becoming a must.

Here are a few insurance policies which will protect you while heading your life to meet the needs of your family from time to time.

And if you are buying a health policy, do not buy it simply for tax saving purposes.  Health insurance covers come with various features and conditions that the buyer should be aware of while purchasing it. Choosing a health policy for you and your family is a serious decision and it requires you to be fully aware of the policy and its benefits.

Here are few important features you should know before buying a health policy:

A recent survey by a global banking major made it clear that only a third of Indians save for retirement. If you are not one of them, it is high time you save for your golden years. Some of you may see it as a faraway situation and some may not know the ‘inflated numbers’ you will see as you move closer to the D-day.

The fact is you need a decent amount of money when you retire to sustain your lifestyle. Let us go to the factors that you should keep track of while saving for your retirement.

During the week we also reviewed the ICICI Prudential Technology Fund at a time when the sector is seeing many tailwinds such as the depreciating rupee and had been rallying.

The investment objective of the scheme is to invest in equity and equity-related securities in the information technology sector. Read to know how the fund has been performing and whether it suits your financial goals.