Keep Your Family Well-Informed About Your Financial Investments

A family is often left in a lurch despite the breadwinner securing their future due to sheer lack of knowledge

Keep Your Family Well-Informed About Your Financial Investments
Rahul Jain 04 June 2021

While financial investments are made to accomplish life goals, when it comes to keeping one’s family well informed about them, few of us tend to fare well. More often than not, we keep our family members aloof regarding our investments, and this could prove to be a serious cause of concern later.

Just as you go about your investments with utmost prudence, it’s equally essential that your family members know where you have invested and how they can access it in times of need. That’s not all. There are several other benefits of this exercise.

Ensure Family’s Support in Financial Decisions

Financial investments and strategies shouldn't be in isolation. This is because your family’s support instills a sense of confidence and prevents you from making a rash decision. When you involve them in your decisions, members contribute their opinion, which helps you see the big picture.

It gives you a holistic view and also prevents friction. If you keep financial matters to yourself, this could be a bone of contention should something go wrong. However, things are different when you have your family’s support, and it aids you tide over a crisis if things don’t work as per plans.

Better Understanding of Finance from Family’s Perspective

While you can have your perspective, you need to understand how your family perceives your investments and strategies. For instance, while you may want to play safe for goals such as children’s higher education or your retirement, your family may want you to be a little aggressive.

Regular discussions will help you understand their viewpoint and move ahead accordingly. Your family’s needs may be entirely different from what you have planned or thought. You can know it only when you actively involve them before investing and make them aware of your investments. If you don’t do so, then there are chances that your collective goals may suffer in the long run.

To Enlighten Family with Money Management Skills

Managing money is a deft art that’s best learned with time. Given the changing dynamics, every member of your family must be well-equipped with this art. If not then, then it makes them vulnerable to mis-selling and making wrong decisions.

However, things are different when you allow them to participate in money matters. For example, if you want to start a systematic investment plan (SIP) in a certain mutual fund, involving your child or spouse in it will help them understand what exactly a SIP is and how to start it. In the process, they will learn about mutual funds as an asset class and their various aspects.

To Secure Your Family’s Future in Your Absence

This is perhaps the most crucial reason why you must keep your family well-informed about your financial decisions. There are many sad stories where a family is left in a lurch despite the principal breadwinner securing their future due to sheer lack of knowledge.

For example, if you have invested in a term plan with your family’s knowledge, then they are well-positioned to use it when needed. However, things are quite different if they don’t know about the existence of such an investment, and in such a scenario, the purpose of term insurance is defeated. As of September 30, 2018, Rs16,887.66 crore of deposits are lying unclaimed with life insurers. That’s a massive amount.

Similarly, if you have invested in a public provident fund (PPF) or the National Pension System (NPS) with your spouse as the nominee, only if she knows about them can she utilise them to fulfill the needs of the family in your absence.

In a nutshell, the entire exercise gives you peace of mind as you know they can access and use the money whenever needed, even when you are no longer around.

Summing it Up

In uncertain times like these and even otherwise, involving and informing your family financial decisions reap rich dividends. Not only it keeps you all on the same page but ensures that the investments meet their objectives with little fuss.

The author is EVP & Head, Edelweiss Personal Wealth


DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.

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