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Musings of a family man: Discussions at home

I thought that given my job as the Founder and CEO of a wealth management company, my daughter would assume that I had this family finance thing sorted but the question got me thinking, and I decided to probe a bit deeper into the questions and concerns that the family had.

What would have normally been at best a curious question from my 17-year-old daughter: “ Dad, Can we afford for me to go to college abroad?”, took on a completely different hue in these turbulent times. It reflected genuine concern – concern for the family, concern for herself and concern for her future. 

The question was not so much related to the COVID-19 lockdown situation and the related delays/ travel advisories etc but much more around our financial well-being given the daily sensational horror stories through the newspaper headlines: Investors lose 1 Trillion rupees / Sensex down most in 10 years /…. I thought that given my job as the Founder and CEO of a wealth management company, she would assume that I had this family finance thing sorted but the question got me thinking, and I decided to probe a bit deeper into the questions and concerns that the family had and believe me their genuine concerns were a wake-up call:

Wife (Designer and Entrepreneur, well aware of the overall financial assets we hold, but not too deeply involved in the actual mechanics): 

1. What does this do to our family's finances overall?

2. Can we afford the college fees for our daughter?

3. What about our retirement savings?

4. How bad can it get?  / what is the worst-case scenario?

My younger daughter (just finishing Grade 12, has been using a debit card for all expenses for the past couple of years):

1. Dad, Will this impact my college prospects?

2. Can we still afford for me to go to the US?

3. How are we doing as a family? Will this impact our future?

4. What about you - your job / your companies?

My elder daughter (just finishing under graduation, with her own bank and PMS account): 

1. Will I find a job in this environment?

2. Should I stay in India or go back to Canada?

3. How are we doing as a family?

And the key realisation was that everyone is worried and concerned and our outreach has to be beyond just addressing our direct investors concerns but making sure that their families feel informed and comforted during these uncertain times.

We have kept the money for education-related expenses in “debt funds” and hence they are safe. 

I will not go into the details of the individual answers to each of the above questions but the broad themes I would like to share are:

-   We have sufficient money in emergency funds for the next 12-18 months of expenses, in case this downturn impacts us adversely personally.

-   We have the appropriate asset allocation or division between equity (equity mutual funds, stocks and shares) and debt (debt funds, FDs, PPF etc,) of our investments.

-  We have kept the money for education-related expenses in “debt funds” and hence they are safe.

-   The equity portfolio is suitably diversified and the long term nature of the markets will help us get back to the retirement corpus that we want. We have seen this volatility before and This Too Shall Pass. Patience is your best friend. I might need to work for a few years more, but we will definitely make it through this and come out stronger.

And believe me, it was a wonderfully liberating conversation for the whole family. I would highly encourage all of you to do the same – ask your family how they are feeling, understand their concerns and answer them the best that you can. We are here to assist if required. 

Believe in the power of asset allocation and the long term nature of markets.

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