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With shopping malls, restaurants, cinemas and airlines shut for business due to the coronavirus outbreak, people are discovering an unlikely benefit of the lockdown. They are actually saving money.

Siriesha Darba, 37, a Delhi-based consultant calculates that she has saved around 5,000 over the past month. Money earlier spent on office commutes such as Uber or Ola rides and takeaway meals from restaurants now sits in her bank account, she estimates.

Pradeep Kaushik, 36, a Bengaluru-based software engineer notes that almost 30 per cent of his family’s income, which would normally be spent eating out, ordering food, mall shopping or going to movies has been saved during the lockdown. “This has helped us realise how much we'll save if we cut our discretionary expenses," he adds.

If you also find yourself in a similar situation, take a minute to think about what you can do with the money. Here are three options:

1. Build an emergency corpus: This is the first and foremost thing you should be doing with the saved money, particularly in an uncertain economic situation such as the present one.

"Liquidity is a cause of concern in these trying times. I have seen people asking the question – how to get maximum return on an emergency fund. I always have one reply – keep it in a savings account and open a sweep account for the same or you can keep it in fixed deposits," says Melvin Joseph, a Sebi-registered investment advisor.

Some banks allow parking money in FDs and automatically ‘sweep it in’ to savings accounts when there are debits from the latter. This allows you to earn a higher return than savings account interest.

“Never expect any great returns on your emergency fund. You should be able to access the funds immediately. Learning from the ongoing crisis, one should try and have 12 months' living expenses in the emergency fund. This will give you a peace of mind and confidence to face any untoward situation," adds Joseph.

Some experts went a step further. "Right now, it's very important to be prepared for future uncertainties. I suggest one should build an emergency fund of at least 12 to 24 months' of their expenses, inclusive of their ongoing EMIs," says Basavraj Tonagatti, a Bengaluru-based Sebi-registered investment advisor.

2. Get your health and life insurance in place: If you don’t already have health and life insurance policies, then get them right away.

“Make sure that you have a robust health insurance policy in place that covers coronavirus treatment," says Priti Rathi Gupta, Founder, LXME and MD & Promoter at Anand Rathi Group.

In case of life insurance, stick to low-cost term insurance and that too only if you have financial dependents. Do not go for products that mix insurance and investment.

3. Invest in mutual funds: If you have the first two points covered, you can consider investing some money in mutual funds.

For low-risk investors and those with a time horizon of less than three years, debt funds work best. However, if you have a sufficiently high-risk appetite and a time horizon of 7-10 years, you can look at equity mutual funds. However, experts suggest splitting this into staggered amounts through SIPs rather than lump sums.

“I would not recommend lump sum investments given the economic scenario. For example, even if you have saved up to 10,000, divide it into small SIPs of 1,000 per month rather than putting the whole amount in one go," says Gupta.

As experts have noted, first ensure that you have an emergency corpus as well as insurance cover in place. You can use your saved discretionary expenses to do this. If this is sorted, you can look at mutual funds and possibly equity funds if you have a high-risk appetite and long time horizon.

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