Skip to main content

Understanding the need for lock-down and desperation for opening-up

Imagine you are a sole breadwinner in the family (well, that's the case in most families in India).

You haven't unfortunately made provision for emergency fund and don't have a health insurance (well, again that's the case for most Indians).

You fall sick...severly sick, requiring several months of rest (personally, I have the experience of falling sick for 6+ months when I was college student)

You start taking treatment & rest and don't go to work. One month passes; you manage it somehow. 2nd month your income will be severely hit or you won't get salary. You have to manage family expenses as well as cost of your treatment. You have no option but to sell your long term assets or borrow. You do one of them.

By 3rd month, fortunately you start recovering. You feel much better. But you aren't cured fully yet. You mostly need another 4-6 weeks rest to fully recover.  But you are desperate to get back to work. You feel you can't afford to rest without income anymore. If you get back to the work there is a chance that your sickness relapses again; but  if you don't go back to work, your family will perhaps be put to difficulties. (Personally, I've gone through this; my dilemma was  between missing learning (not earning) and health; and it was also too boring to sit at home for such long period, at that age!)

So, you get back to work, thinking sickness will go-away and you anyway continue medication. Many a times, indeed sickness goes away, as I've seen. But some times  sickness relapses and in fact becomes more severe (like what happened to me).

Now, you are forced to take rest again and you have no other way than further selling your assets or borrowing. Your family's well being will be just the matter of how much assets you have or how many real friends you have to lend you (because it is loan without interest and without fixed repayment date).

Now replace 'yourself' with 'India' (for that matter any 'not so prepared' country) in above situation. That's what the situation is. We are really stuck between a rock and hard thing.

However, today, it's not just India, but every other country is in the same situation. That's much bigger problem.

On 8th of April 2020, China opened-up Wuhan city (the epicenter and origin of Covid-19) after 2.5 months lock-down. When they did that, it's not that China was seeing zero new cases for a week or two (ideally 3-4 weeks). The incubation period of this Novel Coronavirus is about 3-4 weeks, as learned & experienced globally. So, ideal time for opening up is the time when we have not seen a single new case reported for at least 3 weeks. That's almost sure indication that whole region is mostly cured of the virus. But when China opened-up, it was still discovering 30+ cases every day. This number was too small however, compared to thousands of cases it was seeing in the peak time. For good one month time, since 8th March 2020, in China, the new Covid-19 positive cases found per day, were under 50 cases for most of the days and under 100 for few days, it was 0 for one day. They must have run out patience by that time and would have felt it's appropriate now to open-up. I wish and pray, let the situation doesn't escalate again. However, the initial numbers that are coming up are making me worry. Before opening up, new cases found were between 30-50 as I said earlier. Here are the new cases found since opening up:

Date (April 2020) 8th 9th 10th 11th 12th
No. of New Cases 63 42 46 99 108

PS: Experience, is the most expensive teacher. Any amount of teaching during good times, about getting 'prepared' (Emergency Fund, Insurance, Investing for Life Goals, Asset Allocation, Financial Prudence, Patience) during good times fall on deaf ears mostly. Hope we learn from this experience at least.


Popular posts from this blog

There are two types of self-serving Insurance intermediaries – Online Portals and Insurance “Salesmen”. Each of these are broadly of two types again. Two types of Online Portals are – Aggregators, earning referral fees and Brokers earning commissions. Online portals are too focused on conversions and quick sales than understanding the customer needs, educating the customer etc.; well online portals are not built for that kind of high-touch & personalized engagements. Then, two types of Salesmen are – Sales Staff of Banks or Sales Executives, earning incentives, lured by pay hikes/promotions and Individual Insurance agents earning commissions, lured by foreign trips etc. These salesmen too are too focused on achieving their personal sales numbers than what is best for the customers. A disclaimer to clear any smallest doubt – No, I don’t mean all of them are same; not all are bad. Then there are media houses, bloggers, vloggers, influencers earning th r ough ads or/and referral f

Side-effects of Bull Markets (esp. baseless ones) on Investor Behaviour

Sometimes, few (very few) clients ask me why I don't give them transaction access to their investments with me. They feel, it's their investment (money) and they have birthright to have transaction access to their investments. They feel, like their bank gives them internet & mobile banking, debit card, cheque etc and enables them to freely operate their account as they wish, I should also give full transaction access to their invesments. Few (very few) other clients feel, I should "co-create" their investment portfolio taking into account their understanding & assessment of geo politics & its impact on economy & market, their views on the 'trends' in the market, their view on how the pandemic is going to play out and impacts the economy & different sectors and so on. They feel this 'obviously' because of their vast experience of 2+ years in stock market, they have made great returns and found a knack of investing in the market. F

Write Your Will, Right NOW!

Most people think one should write a will (do estate planning) when they are old. Almost everyone thinks they should write a will when they are rich or have lot of assets. "The best time to write a will is just a day or a moment before one dies! But we don't know when we die. We may die anytime. So we should write the will right now!!" I read or heard the above, the first time, few years ago. I felt it is so simple and strong statement. I started my work on my will right from that moment. It took sometime to understand finer details and way to do it and more than anything else overcome the myths I had (like anyone else) about will writing. Covid-19 is reminding us the above quote in a harsh way. Lakhs of people getting infected, Tens of thousands scrambling for life and thousands of people succumbing every day - with no discrimination of age, gender, net worth etc. We all have lost some or the other in our circles (family members, relatives, friends and/or colleagues). I