Don’t Let Distractions Derail Your Financial Goals, Discipline, Proper Asset Allocation Are Key

When Sir Eric Clapton released one of his most famous songs in 1992 called “Tears in Heaven”, he sang; “Time can bring you down, time can bend your knees and have you begging please”. In 2015, Pathak family had no clue about what enormeous effect time will play later on in their lives.

Mr. Mehul Pathak, an Automobile Engineer, was working as a Principal in Government Polytechnic College in Bhavnagar, Gujarat. He had started investing from very early stage of his career. He came in contact with Artham FinoMetry Pvt Ltd (AFPL) in 2015 and became one of their very first clients. Together they decided to re-align exisiting investments and plan for new investments mainly to fund four key financial milestones. (1) Immediate expenses which they were looking at, in next couple of years, for their daughter Ms. Meha Pathak’s Medical College Admission. (2) Post Graduation expenses for their daughter (3) Wedding expenses for their daughter & (4) Retirement Planning for Mr. & Mrs. Pathak. At that time, portfolio creation approach adopted by AFPL, was to have adequate mix of Hybrid, Large Cap, Mid Cap and Small Cap Mutual Funds via SIPs and regular top-ups as and when liquidity permitted. Disciplined investments coupled with annual reviews & re-balancing, helped Pathak family to successfully fund for their first milestone of Ms. Meha’s college admission in MBBS.

What Happened: While everything was going as per plan, tragedy struck Pathak family. Mr. Mehul Pathak passed away in December 2018 due to a massive cardiac arrest. At that time, Mrs. Vibha Pathak, a lecturer in college and a state level recipient of several swimming awards, was engaged working as a Swimming Coach in Bhavnagar and her daughter Ms. Meha was pursuing her MBBS. Entire responsibility of successfully seeing through her daughter’s career and wedding, came on Mrs. Pathak’s shoulder. Both of them had very limited understanding of finances and investments at that time. But Mrs. Vibha Pathak remained strong-willed and focused all her energy in making future life for her daughter and for herself better. She sat down with AFPL and together they re-charted and re-aligned all financial milestones.

What We Did: AFPL immediately took stock of all her family’s investments and proceedings that were expected from Mr. Pathak’s Life Insurance Company and Employer. Checking files and statements of old invesments, frequently connecting with Insurance Companies and Employer for proceedings and subsequently processing transmission requests at multiple places were major action steps that together Mrs. Pathak and AFPL executed. Once everything was accounted for, a fresh financial milestone was added for Mrs. Vibha Pathak; (5) To buy her own house, as they were currently living in a college provided accomodation. New Investment Portfolio was created which initially had a slightly higher tilt towards Fixed Deposits and Hybrid Funds. Adequate Life and Health Insurance Coverage were added for both Mrs. Vibha Pathak and Ms. Meha Pathak. Over the course of next six to twelve months, multiple meetings, telephonic conversations and exchanges of ideas and solutions were carried out between AFPL and Mrs. Pathak. This reassured her faith in future financial stability for her daughter and herself.

In 2021, Mrs. Vibha Pathak was successfully able to fund for her daughter, Ms. Meha’s post graduation. Ms. Meha Pathak became Gold Medalist MD in Anesthesia. And in October 2022, she bought her own house completing yet another of her financial milestone. And very recently in January 2023, one of her most important Financial Milestone was also successfully funded from her investments. Her daughter, Ms. Meha Pathak got married and settled in Pune in January 2023. She is currently working as a Cardio Anesthetist at D.Y.Patil Hospital along with her husband, Mr. Parantap Trivedi, who is also an MBBS and MD in Anestheisa and works at the same hospital. Her investment portfolio is now adequately distributed within Fixed Deposits, Hybrid, Large, Mid and Small Cap Mutual Funds. From this portfolio, Mrs. Vibha Pathak gets regular income which she requires and also her portfolio keeps growing due to exposure in Equities.

After losing her husband five years ago, many things have changed for Pathak family yet today we at AFPL feel proud in saying that, Mrs. Vibha Pathak has proved Sir Eric Clapton wrong. She remained unhinged by the trauma that time brought in her life. And kept her patience and focus on working along with AFPL in completing each one of her financial milestones, one step at a time.

Lessons to be Learnt:

• Writing down your own Financial Milestones is the key factor for any family: Without financial goals most of the times, investment journey becomes directionless. With no end-post in sight, greed and fear of market movement takes over and it drives the decision making process. This may lead to some very harmful wrong investing decisions, like withdrawing at wrong time or moving from one asset class to aother at wrong time.
• Asset Allocation is the next key driver of successful investment journey: Concentration in one investment product is bad for any situation. Regardless of your financial and life-stage status, it is very important to have right asset allocation in your investment portfolio based on your financial goals. One may never know, when unprecedented changes in life may come up. And if they come up, it is important to have liquidity as well as desired tax-efficient returns. Annual re-balancing of portfolio and proper allocation to multiple asset classes such as; Debt, Hybrid and Equity is must for all investment portfolios.
• Circumstances may change but your focus should not: Life may throw multiple curve balls at us, but it is important to keep undeterred focus on our financial milestones. Sometimes markets may behave irrationaly or other times, our personal income may drastically change. In all such times, if we keep our focus on financial milestones, the chances of going wrong will dramatically reduce.

Disclaimer

The views, information, and opinions expressed in this article are solely those of the author, Tejas Shukla & Mumuskshu Desai, Director(s), Artham FinoMetry Private Limited, Ahmedabad, and do not necessarily represent those of Outlook Money. The case study presented is based on their interactions with their client, Mrs Vibha Pathak, and the financial outcomes shared are specific to her situation and may not apply to every individual. The information contained in this article is intended to be used for general information purposes only. It is not to be used as a substitute for professional investment advice. Readers should seek advice from a certified financial advisor before making any investment decisions based on the information provided in this article.

By Tejas Shukla & Mumukshu Desai Director(s) – Artham FinoMetry Private Limited, Ahmedabad. info@arthamfinometry.com