It might sound clichéd but it’s true that everything can’t be learned from the books. A financial degree can make us an expert in money management. However, some lessons are best imparted through actual demonstration by the wise and the experienced.
And who better than your dear father? In your early years, he had given you the first money lessons whether it is about living within one’s means or planning for the future.
Now, it’s your time to share how investing has become better and easier and help him retire peacefully.
1. Organizing his paperwork
After taking him into confidence, organize all his investment papers. If your father is still holding on to physical shares, it needs to be converted into demat form in order to be sold. If he is holding multiple mutual fund folios, consolidate it.
Get his bank account details, medical information, credit cards, loans, tax returns, mutual fund statements, insurance policies, bill payments and due dates. Make a copy of these documents and share it with your siblings as well.
Digitize all records and familiarize him with the concept of digital lockers.
2. Secure his goals
Ask him about his financial goals. He might be looking forward to retiring a few years early. Check if his current rate of savings and investments are enough to take him closer to his goals.
If he is already a mutual fund investor, find out if his portfolio needs a clean-up. Laggards can be weeded out while exposure to funds more suited to his needs increased, especially if he is approaching retirement. Be aware of the tax implications and other factors though, if you do decide to shift him out of some funds.
3. Emergency funds for his needs
For retired individuals, an emergency fund is more about having a separate fund for healthcare or unplanned expenses. If he has a chronic illness, float a separate health fund to take care of related expenses.
4. Health insurance for him and your mother
Also, ensure your parents are adequately protected from health-related financial risks. If he already owns a health policy, check if it is comprehensive as well as adequate. As per Sec 80 D of the Income Tax Act, the health insurance premium of up to Rs75,000 paid for self & family as well as parents can be claimed as a deduction from your income in a financial year.
5. Introduce technology, if he isn’t already aware
Introduce him to the digital way of investing and share your experience about how it has helped you in your financial planning. Familiarize him with the latest technology that will make it easier for him to shop, book tickets, make payments or transfer funds. Apprise him about the concepts of automation, whereby you can digitally make routine payments or investments.
Credit cards need not be necessarily bad if used responsibly. It can be handy for him especially in case of emergency.
6. Show that he doesn't need to worry about your financial future
Parents often worry about children’s higher studies and marriage-related expenses. However, diverting savings towards such goals can compromise your father’s larger goal of retiring.
If you are young, assure him that you can manage study-related expenses through a loan that can be repaid when you start earning. Start becoming independent and by taking care of your own expenses.
Your foremost financial advisor might need an update on the new financial developments and ways to retire peacefully. A hand-holding when it comes to adopting new technology and products and an assurance that you can manage on your own. What better time than the lockdown to begin this conversation with him.