Financial issues that scare !

According to the latest COUNTRY Financial Security Index, retirement and healthcare expenses are the top financial fears of investors in USA. The survey found that 81% people have at least one financial fear and 21% people feel that their financial fears are holding them back from reaching their goals. 

Although the survey was conducted in USA, it is relevant in the Indian context as well. 

Here are the top four fears confronting investors: 

Fear of not being able to save enough to make investments 

‘I don’t have money to invest’, this is a reason often cited by people who don’t invest. In their quest to fulfill immediate needs, many people do not start investing because they mistakenly believe that investments require a huge outlay.  Advisors say that the key to building long wealth is starting small. “People fear that they will not be able to sustain their investments. Thus we advise them to start with a small SIP amount and gradually increase the contribution as their earnings increases. 

Fear of not able to afford healthcare expenses 

According to industry estimates, the healthcare cost in India is rising 15% annually. With rising inflation, medical costs are bound to shoot up and this is the topmost concern of investors in India. Investors fear that their savings will not be enough to meet the future healthcare expenses or medical emergencies. This is where insurance and a contingency fund comes in handy. 

To begin with, one must have an emergency fund equivalent of six months of household expenses to tide over any contingency such as hospitalization. 

Apart from this, get insured with adequate health cover. People must first do insurance audit, which means calculating how much insurance is needed to protect their family. Getting insured removes the financial burden from the people to a large extent when they are affected by any tragedy or in case of any emergency. They must buy four policies - term policy, health insurance, personal accident policy and critical illness policy. 

Fear of not retiring comfortably 

The majority of investors worry whether their savings will be enough to retire comfortably. Not surprisingly, building a retirement corpus is the top priority for investors, finds a recent report by HSBC Global. To overcome this challenge, many Indians choose semi-retirement to bridge the shortfall in retirement income. 

The challenge is more peculiar in case of women investors, particularly single women. Generally, women need financial support during retirement and single (divorced/widowed) retired women have to support their children. Women in India are generally dependent on their family members to take care of them. They are more risk averse than men. In India, when it comes to retirement planning, most women continue to depend and rely on their family members or husbands. One should always remember that among personal financial goals one of the most crucial is the retirement goal.

Fear of volatility 

While some savvy investors sense an opportunity to make money in volatile markets, majority of them refrain from investing due to the fear of losing money. Also, many investors hesitate to invest in equities if they have burnt their fingers in the past.  It is very important to take rational decisions. It may happen that your  portfolios get affected in the short term due to external events. It would not affect their long term investments.