When Life Happens, Be Liquid

 

The Power of Cash: Aruna’s Money Mantra

Aruna Iyer, 45, was a seasoned professional working with a private bank in Mumbai. With nearly two decades in the financial sector, she’d advised countless clients on saving, investing, and planning for the future. But like many others, she had personally overlooked one crucial aspect of personal finance — liquidity.

For years, Aruna had followed a disciplined investment routine. Her money was parked in fixed deposits, mutual funds, PPFs, and even a second property in Navi Mumbai. Her portfolio looked excellent on paper — until reality struck.

In early 2022, her mother was diagnosed with a heart condition that required immediate surgery. The total estimated cost: ₹8 lakhs. While Aruna had health insurance, the claim process was slow, and upfront deposits were needed quickly. Scrambling for funds, she realised the hard truth — most of her investments were either locked in or illiquid.

“I have money,” she told her friend on the phone, “but I can’t access it in time.”

It was a wake-up call. She ended up paying penalties to break an FD, selling mutual funds in a down market and borrowing from her emergency credit card, - losing both peace of mind and money.

After the dust settled, Aruna re-evaluated her financial strategy. She realised liquidity wasn't just a concept in banking reports — it was a lifeline.

Here’s what Aruna learned — and what every Indian household should remember:

1. Liquidity Meets Emergencies

Life doesn’t come with a warning. Whether it's a health crisis, job loss, or family emergency, liquid assets — money you can access within 24-48 hours — are crucial. Aruna began maintaining a separate emergency fund in a sweep-in savings account linked to an FD, combining accessibility with reasonable returns.

2. Opportunities Knock Unexpectedly

A few months later, Aruna found an attractive IPO she wanted to invest in. This time, she had funds in a liquid mutual fund, easily redeemable within a day. She seized the opportunity and made a tidy return. Had she waited for money to become available, the window might have closed.

3. Peace of Mind is Priceless

Being liquid meant Aruna could sleep better. Financial stress often stems not from lack of wealth, but from lack of access. Knowing she had funds she could rely on, without needing to liquidate long-term goals, gave her confidence and calm.

4. Flexibility in Life Decisions

Liquidity also gave Aruna the courage to take a short sabbatical six months later, when her daughter was preparing for board exams. Without worrying about EMIs or monthly expenses, she focused on family without compromising her future.

To sum up, we often chase returns, accumulate assets, and diversify our portfolios. But as Aruna’s story shows, true financial strength lies not just in how much you have, but how quickly you can use it when it matters most.

The content made available in this article is for general informational purposes only. While every effort has been made to ensure the accuracy and completeness of the content, it should not be considered as a substitute for professional consultation. 

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