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Want to help someone in COVID-19 times? Here’s how to arrange the money

Most mutual funds allow investors to pause their SIPs. This money can be used to help the needy in these times.

April 24, 2021 / 08:27 PM IST

There’s a deluge of cries for help on social media timelines and WhatsApp groups, asking for medicines and oxygen cylinders, during COVID-19's second wave. Many individuals have also volunteered to help . Some have offered to deliver home-cooked food at the doorsteps of isolated patients, while a few others are willing to donate money. If you wish to help with your money, keep these three factors in mind before doing so.

How much to give?

There is no one answer here. Financial planners say that some of their own clients contribute anything between a few thousands a year to over a lakh of rupees.

Consider your own monthly income, expenses and the number of people in your family who are financially dependent on you. There are certain expenses which you will incur even if you have the best intentions to help out others. “You must pay your equated monthly installments (EMIs) on loans taken; you just can’t get out of those”, says Suresh Sadagopan, Founder of Ladder7 Financial Advisories. Children’s tuition fee is another expense you must not compromise on.

But Sadagopan says that if you have saved up corpus for “really long-term goals” like retirement planning, you can make a withdrawal from such a kitty and make a contribution.

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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D.Muthukrishnan, a Chennai-based certified financial planner agrees: “it is good to save for the future. But in these times, it’s perhaps better to contribute to the present first. If ours neighbours get Covid-19, then there is a high chance that we too might get it. Our future itself is in jeopardy.”

If you wish to make it a regular habit, Gaurav Mashruwala, a Mumbai-based registered investment advisor says it could either be a percentage of savings or your annual income. Mashruwala says that he and his wife make it a point to give a part of their earnings every year. Their benchmark: give as much as they spend on their annual holidays, every year. “You can have a benchmark, too. It could also be an amount equivalent to what you spend on clothes every year. That way, you can also keep your expenses in check,” he says.

Where’s the cash?

Apart from paying your EMIs on time, it’s also wise to leave your insurance premium commitment untouched. But in times of crisis, it’s okay to suspend your investments.

Most mutual funds allow you to pause your systematic investment plans (SIPs). No need to stop them altogether; the ‘pause’ feature allows you to just take a break. Some funds allow you to pause for 3-6 months, others allow a break for just a month or two. All you need to do is fill a form online, and state your folio number and scheme name. Make sure you specify the number of months you’d like to pause your SIP for. You are now set to divert this money to a cause you like.

Sadagopan says that you can even break a fixed deposit or two if you wish to donate in these times. Or dip into a contingency corpus if you already have a large one and don’t have financial burdens. “One should not overdo anything, even philanthropy,” he says.

To whom should you give?

Start with your own staff; that’s the most basic thing you could do in COVID-19 times. Especially since many states have imposed lockdowns  that prevent our domestic helps and staff from coming to our homes. Do not cutting their salaries even if they cannot report to work, because now’s the time they need the money the most.

Next, you could try and giving to institutions, such as non-government organisations (NGO) or hospitals. But experts say it’s always best to do your homework before you donate. “Look out for recommendations coming from your own circles. If you are giving it to an NGO, check who the trustees are and the people running it,” says Anu Aga, former chairperson, Thermax.  A little bit of trust, she adds, is required in these times.

Muthukrishnan suggests avoiding NGOs that advertise too much. He cites a prolific NGO that is known to keep as much as 70 percent of all donations for its own administrative and advertising costs and pass on what remains to beneficiaries. “A good NGO doesn’t need to advertise so heavily. Today, if a NGO goes good work, word of mouth spreads through social media.” Like Aga, Muthukrishnan also suggests to do some homework.

Community centers and schools that cater to weaker sections of society are also good options to ensure your money reaches the right person. Sadagopan cites an instance of a central-Mumbai hospital that caters, in part, to poor patients. “A clean bed in a general ward is available for just around Rs 150 per day for the needy. Dialysis procedure is done for as little as Rs 2,000, instead of just Rs 7,000 done at other hospitals”, says Sadagopan.

If you cannot volunteer your time, then a bit of monetary help will go a long way to help those who desperately need it in these COVID-19 times.
Kayezad E Adajania heads the personal finance bureau at Moneycontrol. He has been covering mutual funds and personal finance for the past two decades, having worked in Mint and Outlook Money magazine. Kayezad was the founding member of Mint’s personal finance team when it was set up in 2009.
first published: Apr 24, 2021 10:21 am

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