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POSTED BY ON June 3, 2013 12:38 pm COMMENTS (5)
Hi, I have recently become financially aware and started taking actions mainly due to this site and their books. Previously, I had been under the impression that investing money in any instrument having a remote connection to the market was a risky thing to do not unlike gambling. Fortunately I am out of of that mindset now.
But recently I had also been going over some interesting finance related documentaries (like this one http://www.youtube.com/watch?v=4ECi6WJpbzE talking about the next big bubble) and I was thinking of a hypothetical but not impossible situation, where the Indian/World economy goes into a deep recession in the future. Would we have been better off, if we had just kept all our savings in liquid, properties or valuables form in such situation? The only governmental safety net I could find for India was that bank deposits upto 1 lac is guaranteed by DICGC.
I understand that a deep recession or financial crash is a hopeless situation and a much wider topic than what can be answered easily on a forum, but still it would be good to know if there are some things we can plan for in such situations too..
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Thanks Manish and Ashal. I understand the idea in your comments.
Dear Nitin, on the basis of dear Manish’s input, first decide, how much is too much for you. Say 5l Rs. is enough for your safety net. Now decide where to keep this? I w’d like it to distribute in 2 banks for FDs + 1 liquid fund. That’s it.
thanks
Ashal
chasing number of goals ..i suspect it will directly affect the productivity.
Thanks Manish for the quick reply and the appreciation too 🙂
I agree with you. Apart from stashing away your cash, gold and diamonds in a secret location in your backyard :), having a comfortable stash in an FD seems logical. That is, hoping that the banks don’t go down under, in which case the max you can get back officially seems to 1 lac and you are left to fend for yourself. Though it sounds like a pessimistic scenario, this is what happened in Cyprus recently. One of the 2 major bank closed and the govt decided to just take up to 40% of the bank deposits from large depositors (initially they were planning of taking upto 6-11% from EVERY depositor small or big, but fortunately that decision was reverted). Also to take note is the fact that every economy in the world is unimaginably linked to each other these days, point being that the Cyprus bailout made the Gold prices take a deep dive in India in the last month.
Thanks for your kind work Nitin these kind of appeciations make our day 🙂 . When we wrote out 3 books, we had in mind, that we want these kind of appreciations from our community 🙂 . Thanks for that.
Coming to your point. I think you have a good point , and your thinking at this level is a proof how seriously you are playing in your financial life now . I think rather than some recession or some external event, everyone should measure how long uatcan they last if they cant earn for long . Obviously your ideal situation at the end should be “upto lifetime” . But still at a minimum level I think one should have resources dedicated for 3 yrs of income generation .
If you have 30,000 per month of expenses , then one should have alteast a 10 lacs of corpus in FD or some other place from where he can draw 3 yrs of expenses . I am not complicating it with more products from returns point of view. Just givign a simple point .
What do others think ?
Manish