Protecting Your Portfolio In Turbulent Times

Protecting Your Portfolio In Turbulent Times
Protecting Your Portfolio In Turbulent Times
Himali Patel - 13 April 2020

While the entire world continues to grapple with lockdown and worries about an uncertain future, the importance of saving money and of course investing in the right manner. Several industry experts are sharing their views about the importance of saving money in a proper way so that everyone is able to ride over the tide.

Rahul Jain, Head of Edelweiss Wealth Management in conversation with Himali Patel shares some tips on the importance of saving money in turbulent times – especially such as the one we are currently facing. Excerpts from an interview.

Q1. Pandemic; increasing number of cases daily; job losses and pay cuts – definitely we are going through one of the toughest phases in recent times. What is the best way to start saving?

In such difficult and uncertain times, it is important for everyone to have a contingency fund in place. This emergency corpus or contingency fund, should be sufficient to meet regular expenses such as day-to-day needs, insurance premium, EMIs and school fees for at least six months. Investors should invest for this separately in liquid funds or in their savings to avail it as and when required, without having to dig in to their savings and derailing their financial goals.

Q2. Do normal recurring deposit accounts come in handy in terms of investments?

Well, if you ask me, given the present situation, coming up with a straight-fit answer might be slightly difficult. It goes without saying that the current situation is unprecedented and the future seems uncertain and volatile. It has forced us to rethink all aspects of our personal and professional lives. However, as with every crisis, this one also offers ample opportunity for rare investment opportunities (some could be once-in-a-lifetime), that are available. Investors should use this time to re-evaluate their investments and readjust their asset allocation based on current investment objectives, investment horizon and risk appetite.

Q3. How is it possible to go about building an emergency fund within a short time span?

As I explained in the previous answer, one should ideally have sufficient contingency funds in place. However, if that is not the case, one should prioritise and create an emergency corpus, immediately. This can be easily done by curtailing a few unnecessary and low-priority expenses and conserving cash. It is also advisable that one avails adequate health insurance cover for entire family, given the escalating cost of medical expenses and hospitalisation.

Q4. How one can evaluate and review their financial plan in a simpler way?

In order to do so, one needs to follow certain simple steps and stick to it completely. First, one must ensure that the necessary contingency fund is in place, followed by adequate health insurance cover for the entire family. You must also consider adequate life insurance cover, for the primary earner in the family, to cover for unfortunate contingencies that may arise in his or her absence. After this, prioritise insurance premium payments to ensure that all policies are in force, to meet any exigency that may arise. Whatever is left post provisioning for the above, should be invested in diversified saving instruments, optimal for various life goals.

In turbulent times such as these, one has to plan strategically one’s finances. Especially, given the uncertainty that the future holds. And in order to be able to do so, one has to be patient and try to remain positive as much as possible. Of course, this too shall pass.

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