Nassim Nicholas Taleb brought the concept of Black Swan events. In statistics, it is interpreted as a 1% chance event which is beyond the mean and three standard deviations. In actuarial science, this is called extreme events. The history of mankind has been shaped by Black swan events.

Coronavirus originated in Wuhan province of China and in a matter of three months has brought the entire world into crises; medical systems, economy, the daily life of citizens. Currently, it is total uncertainty about the future across 199 nations of the world.

But there is a positive side to it also. It is time we re evaluate our needs and introspect on what is more important in life, peace& happiness or wealth, position and power? If peace and happiness is the aim, we as Financial Planners urge you to look at the following ten priorities. We have advised these earlier, but many have not taken it seriously.

Emergency Fund :

We observe that emergency planning is only in the plan. Few take it seriously. It is like many thinks of taking insurance after the accident. It is time to revisit your emergency fund which should at least cover six months expenses of the family. It can be parked in Bank savings Bank or in Liquid Funds.

Medical Insurance

We must review our health insurance cover and take adequate medical insurance. It is advisable to take a combination of a base cover and a super top-up cover. It will work out cheaper.

Focus on Goals

It is time to have a look at your Financial Goals and revisit them with the timeline and cost. It is advisable to discuss the assumptions with the planner since assumptions are undergoing fast changes.

Shift focus from returns

SBI has reduced Savings Bank interest to 3% pa, one-year FD interest to 5.70% pa and all Banks will follow soon. Even Govt Of India has reduced public deposits substantially. Senior Citizens Savings Scheme has been reduced from 8.6% to 7.2% now. We are heading towards a lower interest rate regime. The focus should be on the real rate of return and not the absolute rate of return. The real rate is the rate over and above the inflation rate.

The returns of all asset classes including Real estate and Equity are no exception. It will take time for equity to deliver the earlier returns. But assessing Risk appetite before taking exposure in equity is a must. We are now scaling down the assumed equity long term return.

Asset allocation

It is time to have a look at all the assets and bring them all in one place. We generally ignore sunk costs once we made the investment in assets other than equity. It is time to review the asset allocation every year and rebalance them. It should cover Real estate, Gold, Fixed Income assets e.g. Bank FDs, Insurance investments, Postal deposits, Debt Mutual Funds, Company FDs etc and Equities e.g. Shares, Equity Mutual Funds, NPS, ULIPs etc factoring Liquidity, Return, Tax efficiency, Horizon and Risk.

Expenses management

We are into difficult times and there may be a situation where income may not be enough to meet the expenses. This requires a relook at your lifestyle and make few changes. You can review all the expenses and focus on some discretionary expenses.

Write a will

We have observed that this is a low priority for many. Just think of this; the family members will run pillar to post if you have not prepared your will. It needs an executor and two witnesses

Healthy body and mind

This crisis has forced us to think of our health. Proper food, enough water, exercise (Yoga & Meditation) and sound sleep are essentials for a healthy body and mind

Managing Kids

Managing kids at home have become a challenge. It is time for parents to become closer to kids and develop good habits in them. You can make them participate in domestic chores and teach them financial literacy.

Self-development

It is time to introspect and pursue what interests you the most in your life. Reading books, writing your views and thoughts, helping others & society and nurture environment. Technology and Social media can be a big enabler.

We will face this unprecedented situation and use this opportunity to make our life better.