Investment Is A Balancing Act

Purushottam Agrawal, a businessman, has experienced several market cycles across his life of 57 years. It takes a great deal to endure the volatile market movements and stay invested. With unmatched patience, he retained his trust in his advisors and the markets for all investment decisions.

Jawahar Motwani is a second-generation financial advisor in his family. His legacy in the advisory business is also carried forward with his third-generation catering services to their clients’ third generations.

From a humble beginning as a mutual fund distributor in early 2008, Jawahar has seen tough times in coping up with deep market corrections during the global financial crisis. The markets were also clouded with the guaranteed-return, fixed-income investment options offered by banks and post offices. However, considering the choppy market conditions, he advised his clients to invest through Systematic Investment Plans (SIPs).

SIPs have been famous for helping investors average their investment costs, but their greater utility comes from the discipline SIPs bring to the investors through consistent savings.

While traditional investment products have been more prevalent, Purushottam got easily convinced about investing in mutual funds. He had been managing his business for quite some time now, and he could understand the power of wealth creation through equity markets. At the same time, he could not invest in stocks directly due to his business commitments.

Mutual funds came as an obvious choice for him to invest towards his financial goals like saving for his retirement, marriage of his children, and various short-term objectives. Jawahar also advised him to maintain an emergency corpus to tide over any short-term financial contingencies.

Once the preliminary discussions were done with Purushottam, the Portfolio was designed with a balanced approach suiting his risk appetite, age and goals. This turned out to be a portfolio of good compounding returns. Portfolio de-risking was also ensured during the annual review, steadily shifting equity assets towards debt schemes. This ensured that the portfolio risk stayed suitably aligned with the objectives of prudent financial planning.

Talking about his advisory experience with Purushottam, Jawahar shares, “Across the market ups and downs, it was a tough time for the investors to stay put in the markets, but Purushottam continued to trust us and our planning and fund selection across the market movements. While the returns were lower initially and also negative for some time, the power of compounding ultimately cast its shadows on the investments, and the portfolio returns went up substantially.”

A pleasant investment experience for Purushottam also helped Jawahar gain more clients through word-of-mouth publicity. Jawahar shares, “Purushottam Ji gave us several references which allowed us to manage portfolios of some more families. We try to make as much as possible smooth investment journey of our every client with our dedicated marketing and sales team as well as a service team.”

While Jawahar has had a long relationship with Purushottam Aggarwal and his family across different generations, the fundamental principles of investing have continued to be the same. When one stays disciplined through the investment journey, it becomes easier to sustain the investing momentum and continue to invest towards the financial goals.

Happy investing!

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Jawahar sums up his journey with Purushottam while also sharing some suggestions for mutual fund investors as below:

• It is important to invest through the market corrections: What helped the Portfolio was not the fact that Purushottam continued to stay invested, but also since he continued investing through the market lows. When one invests at lower levels, higher units are allotted per SIP installment. The average cost per unit also gets lowered across the Portfolio, which ultimately helps to push the returns higher once the markets bounce back. Instead, if one stops or pauses the SIP investments when the markets are trending lower, one cannot take advantage of lower prices during the fresh periods of investments.
• It is important to review the portfolio periodically: Jawahar shares the utility of a periodic portfolio review and says, “Money matters need trust. We are in a business of trust. Managing money seems easy, but I believe it’s not, as money belongs to others. It gets tough because the other persons’ fate is dependent on your portfolio selection and your recommendations. A portfolio review at regular intervals is helpful to implement changes well in time if so required.” A portfolio review helps identify underperforming schemes in the Portfolio and replace such schemes with better performing schemes. This helps keep the investment portfolio in good shape and stay healthy.
• Link the investments with financial goals: When investments are linked with specific goals, one can choose the suitable mutual fund scheme which best suits the goal and investment horizon. For example, debt schemes are suited for short-term financial goals due to their relative stability. Equity schemes are generally considered suitable for long-term goals but may not be suited for short-term goals due to their inherent volatility. Linking the investments with specific goals also helps in continuing the investment journey, especially during the market corrections. Such goals tend to act as an implied motivation to continue moving towards such goals.
• Stay true in the discussions with your financial advisor: Owing to their financial markets experience, financial advisors can be the GPS navigation tool for the investors, guiding them through the bumpy rides in the investment journey towards the destination. They can also strengthen the investor’s trust and confidence in the markets and hand-hold them through the journey. However, the investment strategy tends to be relative, and the investment decisions taken for one investor may not be true for another investor. One should stay true in the discussions with the financial advisors, as such discussions aim to find the best possible investment strategy considering the risk appetite, goals, and investment horizon. It is always helpful to share any specific financial information with your advisors, impacting the financial plans.

Disclaimer Financial Planning of Purushottam Agrawal is based on the “personal opinion and experience” of Jawahar Motwani, Director, Motwani Consultancy. It should not be considered professional financial investment advice. No one should make any investment decision without first consulting their advisor and conducting research and due diligence.

Jawahar Motwani, Director, Motwani Consultancy