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Last Updated : May 24, 2019 05:09 PM IST | Source: Moneycontrol.com

Viewpoint | Investment lessons for distressed Jet employees

It is important to keep family members in the loop about the financial situation.

Moneycontrol Contributor @moneycontrolcom

Shweta Jain

I have over the last few weeks seen so many people give Jet employees a hard time over how they have made the mistake of not saving enough for rainy days. I have also come across people who have said that our generation does not know the importance of saving and the glamour of the airlines industry led to the flashy lifestyles of their employees. I have also seen people use their images to teach life lessons. While the first few didn't seem too much, to use them and their misery to sell products or services is insensitive.

Instead of advising them, I would like to help them get their finances in order now. I would like to advise them on how to manage this cashflow crunch, whether to take loans now or whether they should dip into their investments or how they ensure they manage this difficult time without affecting their future, etc.  Most importantly I will tell them that "all will be fine". This is a tough phase in their lives and they need to manage this, but having a positive outlook for tomorrow and having hope is equally important.

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I applaud people who extended help and actually put out posts on social media asking people from Jet to apply for jobs and giving them preference. This is a good start.

So, if you are an employee of Jet and without a job, what are your options to manage your cashflow now? Now, each one will have different goals, cashflow needs, etc. So, evaluate well before you take a decision. I know things are difficult but don't let this rattle you.

Step 1: Don’t panic.
Step 2: Consider all your options.
Step 3: Evaluate each option individually.

Step 4: Choose the option that’s right for you.

So, the options you have for immediate cashflow:

Your investments

Choose liquid funds first and fixed deposits (FDs) next. If you have equity investments, you can withdraw them next. While I agree we don’t really want to disturb equity investments and should not withdraw them in the short run; but the fact of the matter is that these should be considered- at least in part to withdraw to avoid taking personal loans to meet expenses. Personal loans could be anywhere in the range of 10 to 24% p.a depending on your credit score etc. You will be burdened with another loan here, another commitment and hence withdrawing your investments makes more sense here than taking another loan. Even within equity investments, Consider the ones that aren’t doing well first; sell the ones which are not performing. Your Employee Provident Fund (EPF) is another option that you can consider. The choice and preference of withdrawal may differ from one person to another and there is no one right answer, which is why you must think of your situation and preferences before you decide, don’t blindly follow what others are doing.

Reduce commitments

If any of your Systematic Investments Plans (SIPs) are running, stop them for now. But promise yourself to start this again as soon as you get your next job. Monthly requirements such as your rent, groceries etc should be cut to the bare minimum and stop eating outside. For your EMIs, talk to your Bank/ Loan provider and see if you can take a break from the payment. This will depend on various factors such as the type of loan, your credit score, the loan provider. There will be penalties too if you are able to take this break, so be aware of that. However, this may have an adverse impact on your credit score, so this should be your last resort.

Keep that credit card aside because this will tempt you into spending when it is the last thing you should do now. Since we often use shopping as a “pick me up”, this is a real risk right now! If you can’t manage to keep temptation aside, cut it or cancel it.

Health insurance

If you don't have a health insurance now, take it even if it is for a small amount, a Rs 1 lakh family floater or whatever the policy is. I know this is an additional cost and you don’t want to spend on it now. But you should get it first and now. What if someone falls sick or meets with an accident now; because when it rains, sometimes it pours. It could be just plain bad luck, so, be prepared.

And very importantly, spend time with your family and friends to keep yourself upbeat. Keep your family aware of your financial situation as well. Use this time to reflect on what your next steps should be. Don't jump into decisions as this may impact your life in the long term.

Use this time to build resilience. Don't feel sorry for yourself and don't get into the "why me: mentality. I don't want to sound preachy but I do know what it means to go through tough times. So, don't let this tough time bring you down.

(The author is founder & CEO of Investography)
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First Published on May 24, 2019 01:26 pm
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