What To Do With Your Money Right Now

Arm yourself with everything you need to know to keep your finances safe and healthy

- Devangshu Datta

My friend, Ranjan Bhattacharya, 52, retired from the Navy about a year ago, after serving in submarines, arguably one of the world’s most isolated jobs. Post retirement, he’s made up for lost time by turning into a news junkie. In this time, he’s acquired a large portfolio of small, obscure stocks. Watching the TV market shows, he follows recommendations and buys.

Another friend, Abhijit Banerjee, 61, is worried if the government is really going to seize his fixed deposits and convert them forcibly into bank shares. Like other 60-plus people, he keeps a lot of money in the bank in case of medical emergencies.

These instances reflect typical middle-class attitudes and concerns about personal finances. Lakhs of people who had not heard of the stock market a year ago, now believe “mutual funds sahi hai” and blindly buy TVrecommended shares. And, the infamous bail-in clause in the new Financial Resolution and Deposit Insurance (FRDI) Bill, which allows the use of the money of depositors to bail out loss-making, ailing banks, has struck fear into the hearts of many who are still recovering from the shock of demonetization.

So, what should you do with your savings in 2018? By the time you read this, there may be significant changes to the tax system, but the advice will remain the same in broad terms.

Spread your money across asset classes. Put some savings into debt, invest some in equity, and make sure you have enough insurance to cover emergencies and take care of your family. Also consider putting some savings into gold and real estate. Avoid cryptocurrencies (see box on p 62)— unless you’re tech-savvy, be prepared to lose vast amounts. Here’s a quick tour of the various options.