A reader says, “Is having all my net worth in digital assets (equity MF/Demat or
debt PF/PPF, etc.) safe? What may happen if some hacker hacks my digital life or, worst case, hacks into the government or AMC database and deletes our holdings? What will happen if our CDSL accounts are hacked or erased, or servers are on
fire?”
“I don’t like real estate (for non-transparency, more govt intervention, and all those reasons which you list) and Gold, so continued with equity and debt only, but having everything digital in life, isn’t this a big risk? Shouldn’t we invest some in physical
assets also?”
“You may say, I might be thinking extreme, but believe me, being a technology person, I have seen things going bad with technology as well. One recent example is my father-in-law, a government pensioner who has had an account in SBI for at least 30-40 years. In the SBI database, they don’t have any single transaction in his account for one and half years (from 1st April 2020 to 31st Aug 2021). Everything is wiped out, and we learned this when we enquired for a physical statement for some work”.
“They know the balance on these dates but have no record of transactions for this
period. My father-in-law, being a person from the last generation, maintains various passbooks which we will search and show to SBI for all those transactions, but what about people like us who rely on Internet banking even for statements? We did not lose anything in this SBI incidence, and SBI may eventually take the data from us and update their system. If things can go wrong with the country’s biggest bank, things can easily go wrong with small AMCs, etc.”
“Should a person seek physical assets after getting to a good level in digital investments? How do you safeguard your digital life and investments? How do we be sure that RBI and SEBI will take care of us if things go bad with banks AMCs or the EPF department?”
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I strongly believe in Murphy’s law, which states that what can go wrong will go wrong, with the caveat that we can never know everything that can go wrong.
A lot of physical cash at home has always come to our aid when technology fails. People in Chennai have experienced this thrice in the last eight years – in 2015, 2016 and 2023 when storms and flooding took out power, internet and telephone lines. Cash was the only way we could pay.
So hard cash is the first line of defence we should always have. But there is a limit to how much we can hold. Physical assets come with risks – theft, natural disasters, etc. So, the grass is certainly not greener. And even physical asset ownership is stored digitally!
By definition, risk is something that you cannot truly plan for. So we can only be prepared so much. But even that, many are not bothered to.
Hacking is a big problem, yes. However, hacking individuals is a far greater risk than hacking organisations (who, one can only assume, have the foresight and funds to provide security, geographically distributed backups, etc.). Also see: Nippon Mutual Fund website has been down since a cyberattack on 9 April 2025.
Individual online security is extraordinarily important when most of our net worth is digital, and we should focus on that. My most important tip is to have two-factor authentication (2FA) on two devices. IMO, the purpose of 2FA is defeated if the login is in the same mobile device where the top arrives. I am against any online transaction on mobile devices and still use a feature phone as my main phone. Also, see Online Security vs. Online Convenience and How to manage passwords safely and protect our privacy. Related: Personal Cyber Security Insurance: What you need to know.
Once we have reasonably secured our digital presence and hold enough cash at home and perhaps other physical assets, we can only hope for the best, as the rest is not in our control. After all, even if the corporations handling our money are super ethical and careful, a single solar flare can set us back to the Stone Age! See: Forget market crashes; we will lose everything if this happens!
God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference. – Serenity Prayer by Reinhold Niebuhr
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