Facing job loss? Investment moves that will keep you financially secure

The possibility of huge job cuts, especially in the Indian IT sector, has been in news for some time. Are you one of those worried employees who could be facing the axe or are feeling jittery in the midst of an unstable environment where others are losing their job?

What are the money moves you should make if you are facing potential job loss that could lead to a situation of you not getting the salary cheque at the end of the month for some time? What are the investment moves you should make to keep yourself somewhat financially safe if you end up being one of the retrenched employees?

For starters, financial planners advice to build an emergency corpus while the going is good at your job and invest the same in safe assets. “You will always be at an advantage if you start saving for a rainy day right from when you receive your first paycheck. It is advisable to keep at least six months of expenses in safer instruments,” Chitra Iyer, COO, HappynessFactory.in said.

Iyer says that among the must-have investments is a health insurance cover outside one’s  job which and should cover the family when you are between jobs. “A portion of your savings can be invested in liquid funds which you can sell to counter any emergencies or contingencies. Another contingency plan is to keep three months of expenses in your bank account from where it can be withdrawn at the earliest,” she said.

Anil Rego, CEO and Founder, Right Horizons, says if you are in an environment where you could lose your job, your priority should be to preserve whatever you have. “Without a full-time income source, there will be hardly any disposable income left to invest. However if you generate a surplus, capital protection will be the first priority. Liquid and less risky debt MFs should be preferred over bank fixed deposits (FDs) due to higher tax efficiency,” he said.

Here are Rego’s 10 money suggestions in the event of job loss:

• Keep your expenses bare minimum, and avoid indulging in luxuries.
• Do not withdraw long-term money like tax-savings MFs and provident fund. They should be the last option.
• Continue paying health and life insurance cover premium. Even when you are out of job, sickness and unfortunate events can happen
• If you have dependents, a life cover can financially protect them in case you expire.
• Avoid the desire to liquidate investments meant for retirement, or long term goals like children's education and their marriage. Jobs will come and go, but those goals are sacrosanct.
• If you have already lost your job, keep paying your EMIs for home loan.
• If you have bought a second home on EMI, explore the need to bear two EMIs when you are unemployed.
• If you have a new car loan, you may be required to take the hard decision of selling the vehicle.
• If you have been informed that your job will go or are just preparing for it, there will be a notice period. Try to save at least 25-30% of monthly salary during the notice period. Add this to your emergency fund.
• Once you get a full and final settlement, try to pay off costly credit card debt immediately. Carrying credit card debt, even if you have your job intact, is a not smart thing.