A READY RECKONER FOR A RAINY DAY

The worst mistake in a financial crunch is to prematurely encash FDs, redeem mutual fund investments or sell gold when there are smarter options to source funds

- Aprajita Sharma

The COVID-19 outbreak and the national lockdown that has followed have inflicted deep financial wounds on people. Scores have lost their jobs and equally high numbers of workers have had to take pay cuts. Entrepreneurs have suffered heavy losses or shut down their businesses. Then there are those who have been infected by the virus itself. Crises like these invariably force people to make unexpected withdrawals from their investment corpus, as not everyone maintains an ‘emergency fund’.

However, the choice of the investment to be encashed needs to be wise and one must look beyond conventional ideas, such as encashing fixed deposits (FDs), redeeming mutual funds or selling gold jewellery. Here are some of the best options available to meet financial exigencies.

WITHDRAWAL FROM EPF, PPF

If you don’t have an emergency fund or are falling short despite dipping into what you had saved for a rainy day, you may consider withdrawing some amount from your EPF (Employees’ Provident Fund) corpus. To cushion the impact of COVID-19 on the lives of people, the central government has allowed EPF subscribers to withdraw up to three months of their basic salary and dearness allowance or 75 per cent of their EPF balance, whichever is lower. Any such amount withdrawn will not invite tax. In case of job loss, you can withdraw your entire EPF balance two months from the last day at work.