Industry

Don’t sweat the small stuff

Being alive, being well, and being safe is all that matters today. Everything else is small stuff and not worth your sweat right now. In case you have been fretting about the following issues to do with your money, let’s just allay some of your concerns.

Low interest rate

If you’re worried no end about the low interest your deposit is fetching you and making calls to banks or visiting their branches (with masks), to know where there are better rates, let it go. While the RBI is using many tools to keep the government bond rates low, the creeping inflation is slowly pushing rates up. If you have not noticed, some of the large NBFCs deposits have started increasing their deposit rates offered to senior citizens and you will likely see many such hikes slowly. Just renew your deposits for shorter periods of 3-6 months so that you can lock into higher rates a while later. If you have longer horizons, go for floating rate bonds from RBI or the other small savings schemes which still offer good rates.

This temporary period of low returns should not push you into high-interest rate traps at this juncture – where promises of high returns may come with high risks to your capital. It is one stress factor you can easily avoid in these tough times! Just be patient for higher interest rates to come by. You are not alone here. We’re all sailing in the same boat!

Stopping SIPs

While many of us will tell you that stopping SIPs is a ‘bad habit’ – this does not hold good in extraordinary times like the present one. If your job or salary is shaky or you have to spend more for the safety of your family – like buying a pulse oximeter or a good steam inhaler to buying a personal vehicle to avoid public transport for some time – those should be your priorities. Skipping few months of SIP is ok. For long-term investments, this is not going to materially change your wealth status. And you can always make up for the lost savings in good times that will follow! What is avoidable is skipping EMIs. Those will leave you with sleepless nights.

Selling investments

By now, most of us have heard or experienced the cost of treatment for COVID-19 and the after-costs such as oxygen and the support needed for extended periods. While it is good practice not to dip into investments allocated for future goals, what are they for, if not to meet any sudden exigencies in the lives of your near and dear?

A few people I know are stressed about not having enough money to meet any such exigencies because they are ‘fully invested’. Yes, it will mean a hole in your investments made so far, especially if you are not covered by insurance (please explore Corona Kavach if you are in high-risk States). But there will be opportunities to invest and save with some prudent planning and cost cutting in future. So don’t worry about it.

Instead, see how you can break your investments. In general, your bank fixed deposits are the easiest to take out, for 2 reasons: one, your spouse or family (if you have not kept them aware) can’t possibly know which mutual fund or stocks to sell to take out money in an emergency. An FD is easy to break, and money gets into your account in no time. Second, unless you have locked into FDs some years ago, the interest rate won’t be too high for you to miss any great return opportunity.

Hence, from a perspective of ease of operation and returns, prefer breaking FDs.

Next, if you are into fancy new-age investments (I call them gambles) of bitcoins or dogecoins or NFTs (non-fungible token), encash them and keep in your savings account. Your family is unlikely to know that there is money stashed there (or know how to sell/withdraw from them) and may dip into other investments (like PF) to spend for emergencies.

Finally, this may be a good time for you to exit some poor performing stocks or mutual funds and keep them as cash if that provides comfort to your family. Don’t be obsessed with reinvesting the proceeds right away.

Money in savings account can be a great source of relief for your family and there is no harm in providing that comfort in these tough times. You can always redeploy later. Cash is king – let nobody tell you otherwise in these times.

Stop tracking investments

Trust me, nothing will be lost if you stop tracking investments daily. If any, it may even help avoid impulsive acts that turn out to be wrong. Try to focus on your long-term goals instead of getting swayed by short-term returns in pandemic-related themes. These can turn out to be unnecessary sources of stress later.

Instead of staring at your portfolio, entertain yourself – whether that means investing in a good musical app or podcast series or subscribing to OTT channels in these times.

Wish you all good health! Wealth shall follow.

(The writer is Co-founder, Primeinvestor.in)


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Printable version | Jun 21, 2021 4:35:19 AM | https://www.thehindu.com/business/Industry/dont-sweat-the-small-stuff/article34516914.ece

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