Execs brace for shorter job tenures
Following layoffs declared by many MNCs, Indian executives get ready to face a shorter serving tenures.
By Arun Iyer, TNN |
BANGALORE: While one doesn’t know how many people in Intel India have lost their jobs, India gets ready for a new phase — that of shorter serving tenures. In this kind of a scenario, planning your finances to manage through the ‘rough winter’ becomes critical. Financial planners say individuals and families need to focus on planning for medium and long-term. Long-term planning is needed to meet the post-retirement requirements or to plan for children’s education/marriage.
Manoj Shenoy, regional director of Anand Rathi Securities, says individuals/families need to have a cushion of up to six months to meet the short-term contingency (arising out of a job loss).
Mr Shenoy says this cushion would cover average monthly expenses. If your monthly salary is Rs 1 lakh and expenses are Rs 60,000 per month that means your cushion should be at least Rs 3.6 lakh. “One can choose from a variety of instruments like fixed deposits and liquid funds,” says Roopa Shankar, a Bangalore-based financial planner. A debt fund, for instance, provides about 5.8% (post-tax) return. There is a caveat, though the cost of redeeming investments/deposits is not expensive.
Take the case of fixed deposit — the cost of premature withdrawal of say a 90-day fixed deposit is lower than compared to breaking a 365-day fixed deposit.
Manoj Shenoy, regional director of Anand Rathi Securities, says individuals/families need to have a cushion of up to six months to meet the short-term contingency (arising out of a job loss).
Mr Shenoy says this cushion would cover average monthly expenses. If your monthly salary is Rs 1 lakh and expenses are Rs 60,000 per month that means your cushion should be at least Rs 3.6 lakh. “One can choose from a variety of instruments like fixed deposits and liquid funds,” says Roopa Shankar, a Bangalore-based financial planner. A debt fund, for instance, provides about 5.8% (post-tax) return. There is a caveat, though the cost of redeeming investments/deposits is not expensive.
Take the case of fixed deposit — the cost of premature withdrawal of say a 90-day fixed deposit is lower than compared to breaking a 365-day fixed deposit.
While one could invest in stock markets, there is the inherent risk of the market momentum changing. Also, stock markets carry short-term capital gains of 10% if stocks are sold within 12-months.
While companies provide three months equivalent as severance package, Mr Shenoy says one needs to plan for the next three months.
Mr Shenoy and Ms Shankar advice that honouring loan-repayments (like home loans) and insurance premia payment is important. “Insurance is a tool for protection and nobody should look at defaulting on this. Home loan EMI should also be paid off regularly,” adds a senior official with HDFC.
Mutual fund managers said that most investors chose to exit out of SIP route when faced with a problem of making regular payments. “SIP is an investment arising out of the surplus. If the surplus declines or disappears, it is but one area which people would exit,” complains a fund manager.
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