Balina Sahoo (40) and her husband Santosh Sahoo are software engineers working in private organisations in Bhubaneswar. They are all set with a good financial planning to achieve their different goals from quite an early stage, thanks to their mutual fund distributor Mr. Sudhansu Mohapatra. Being proud parents of their six years old daughter - Arohi who is in primary school, they, as any parents would do, desire to have adequate corpus for their daughter’s higher education. At the same time, they aim to create wealth for their retirement and enjoy life on their own terms and conditions.

Meeting with Mr. Mohapatra

The credit of their early financial planning while the Sahoos were in their late 20s goes to their mutual fund distributor Mr. Mohapatra who is also the founder of Subham Capital. The Sahoos came in touch with Mr. Mohapatra in the later part of 2010. This was the time when the world’s economy was gradually coming out of the recessionary period and the financial markets were in the recovery mode post the 2008 crisis.

Since Balina and Santosh were a newly married young couple, Mr. Mohapatra knew it would be the appropriate time to start their future goal-based financial planning. Further, being young the Sahoo’s had enough time in their hands to create long-term sizeable wealth - a substantial positive factor which Mr. Mohapatra wanted them to benefit from.

Investment Strategy

“The Sahoos were quite young when I met them. They have their dreams and financial goals. And the best part was they had a fair understanding about importance of investments to create wealth,” narrates Mr. Mohapatra, a seasoned investment professional. To begin with, he gave a patient hearing to Balina and Santosh and tried to understand exactly what they aimed for. Basically, the Sahoos wanted to create a corpus of Rs 1 crore for their future. Once Mr. Mohapatra jotted down Sahoos’ requirements, he took them on a brief education drive about financial planning which should be goal-oriented. “I explained Sahoos that wealth creation is a long-term process which can be fulfilled only with a commitment to stay long with patience and discipline,” says Mr. Mohapatra.

He recommended a systematic strategy to invest in mutual funds through the SIP route. He explained in detail how SIP can help investors fetch units across the market cycles while maintaining cost averaging along with compounding benefits. To begin with, the Sahoo started with a monthly commitment of Rs 15,000 through SIP mode in September, 2010 and the long wealth creation journey took off.

Consolidation phase of 2010-2013 and Sahoos’ Rising Concerns

At the time when Sahoos started their SIPs, the markets were inching closer to the pre-2008 crisis level amid volatility. But what unfolded in the upcoming years did frustrate several of the investors as the markets were going nowhere. Balina, like other investors, had no idea that markets could hover at the same levels for nearly 4 consecutive years. This was quite a frustrating experience for investors and Sahoos were not an exception. Despite being regular with their SIPs for all these years, their CAGR was merely 4% till 2013, much lower than what traditional investment avenues offered. This was something which disappointed Sahoos and it became a cause for worry. As a result, Balina kept communicating with Mr. Mohapatra and expressed her concerns. She even went to the extent of asking him to stop the SIP.

Mr. Mohapatra was well versed with the market cycles and knew the power of time spent in the market. He took the Sahoos in confidence and explained that this is merely a part of the market cycles. “I reminded them about their goals and their commitment to stay long-term with patience. This did help keep them on track and I could navigate them through that period,” reminisces Mr. Mohapatra. The good part was a continuation of SIPs during 2010-2013 helped his young couple clients acquire mutual fund units at relatively very low prices. It turned out to be quite a rewarding accumulation phase as the market was set to turn around.

Sahoos’ Patience paid off

By the end of 2013, Indian markets began to move upwards. Within one year, the CAGR in Sahoos’ portfolio catapulted to a whopping 25%. This was truly an eye-opening experience for Balina and Santosh as they could witness the real power of compounding simply by staying invested. “Had we discontinued our investments and withdrawn the amount, we would have made a blunder. We are obliged to Mr. Mohapatra’s continuous guidance which helped us tremendously,” says Balina. Since then, the Sahoos, now matured enough in the market, never looked back nor they ever thought to discontinue their investments irrespective of the market cycles.

Positive Impact — Financial Planning for Retirement and Child’s Education

With a happy investment experience during the 2010-2014 period, the Sahoo couple, who were soon expecting a baby, added two major financial goals in their overall financial planning. Still in their mid-30s, they desired retirement solutions through mutual funds and started SIP for their baby girl as soon as she turned one. Mr. Mohapatra could see the rising maturity in his clients and readily helped them plan their retirement and Arohi’s higher education once she turned 15. Balina and Santosh, who had developed quite a good relationship with their financial distributor, put full trust on Mr. Mohapatra and moved ahead with additional investments as recommended.

Present Status

Sahoos are soon completing their 13th year of their mutual fund investments with Mr. Mohapatra. During this phase, they witnessed various market cycles and the biggest one was during the pandemic. However, they remained invested throughout the period and are now seeing the real benefits of staying long as they have generated enough wealth, much beyond their actual expectations.
Investments for Arohi, now 6, are also on track. Balina and Santosh are now confident that they don’t have to worry about their future financial health. They thank Mr. Mohapatra for being a torch bearer in their wealth creation journey. “The successful investment could not have been possible without their support and understanding. I am happy that Sahoos trusted me and remained goal-focused with a long-term and systematic approach throughout their investment,” acknowledges Mr. Mohapatra.

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Lessons Learnt

• Mutual Fund investments must be goal-oriented
• Selection of schemes need to be in accordance with the financial goals
• Wealth creation takes time; reviewing portfolios frequently only adds up to stress.
• Review the portfolio once in a year with your advisor
• Patience is the key to be successful investor as markets could be volatile in the short to mid-term tenure
• Have faith in your financial advisor.

Disclaimer

The views, information, and opinions expressed in this article are solely those of the author, Mr. Sudhansu Mohapatra, Founder of Subham Capital, and do not necessarily represent those of Outlook Money. The case study presented is based on Mr. Mohapatra’s interactions with his client, Ms. Balina Sahoo, 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.

Disclaimer

The views are personal and are not part of the Outlook Money editorial Feature.