The current covid-19-triggered crisis is not the first one Mangesh Rane, 42, a captain with a prominent airline in India, is facing. A year ago, he was working with Jet Airways when the airline suspended operations. His emergency corpus came to his rescue then. “We were not paid salaries for three months but I was able to get over the situation because I had earmarked savings for emergencies. I had nothing to worry for three-four months," said Rane.
But this time around, he thinks, the situation is grimmer. “There were jobs elsewhere then. But that’s not the case this time around, especially when it comes to the aviation industry. The entire sector is affected and not just one company. I have friends who have lost their jobs but there is nothing to look forward to, immediately," said Rane. Since airline operations are not regular yet, he focuses on spending quality time with his wife Hemangi, 38, who is a homemaker, and two daughters, Sanika, nine, and Jahnavi, six, when he is home.
Another thing that Rane is focusing on is adding to his emergency corpus because he believes the covid crisis could be a long haul “with social distancing and other restrictions likely to be in place for a longer period, even when the industry fully opens up", he said.
His financial planner, Melvin Joseph, a Sebi-registered investment adviser and founder of Finvin Financial Planners, agrees. “People working in sectors like hospitality and airlines should necessarily have 12 months of living expenses, including equated monthly instalments (EMIs), as emergency fund," said Joseph, with whom Rane started working in 2018. “People who do not have an emergency fund should temporarily stop ongoing investments and create one," he added.
Rane, who has been into the habit of saving right from the beginning, hasn’t had to stop any of his investments due to the crisis. He learnt the importance of saving from his parents. So even before he met the planner, he used to invest via systematic investment plans (SIPs), direct stocks and Public Provident Fund (PPF), in addition to the Employees’ Provident Fund (EPF). But when he read about the benefits of investing in direct plans of mutual funds, he decided he needed professional guidance to pick the right funds since there was no intermediary involved.
Joseph set about servicing this financial need of investing in direct plans of mutual funds first when he started working with Rane. “He was aware of the benefits of investing in direct plans, but he was not aware of how to go about investing in them or how to exit from regular plans," he said. While doing this, Joseph took into account Rane’s overall portfolio and his goals.
Rane used to invest his surplus but the saving was not working towards specific goals. Now, he has created the buckets of higher education and marriage of his two daughters and his retirement.
Thankfully, the covid-19 crisis has not affected his goals yet. “He is maintaining sufficient liquidity to manage the ongoing investments," said Joseph. Rane is open to tweaking investments and goals in case the situation worsens. For his debt portfolio, he only used to invest in EPF and PPF. Now he has added debt mutual funds to it.
Rane has two sets of health covers from his company and the Federation of Indian Pilots (FIP), an industry body. Both the policies provide substantial cover together. While the FIP cover is valid till the age of 90 years, the company cover is valid till retirement.
He is also planning to buy additional personal health cover. “I have suggested him to purchase a high-value family floater policy as the conditions from these group policies could change in future," said Joseph. Since he has company-provided life insurance and decent real estate assets in addition to liquid investments, there is no need for a separate life insurance, added Joseph.
For Rane, one of the major life lessons from the financial planning process has been getting proactive about his finances and not “leaving it to destiny".