Dr. Saurabh Banerji, 43, is a Lucknow-based medical practitioner. His wife, Rubina, is a businesswoman. They have a daughter, aged 16 years.

Banerji invested in a few mutual fund schemes in 2006, when his daughter was born, in order to save for her future.

But he made a few fundamental mistakes. He invested on someone’s advice, without checking whether his investments were aligned to his goals. In addition, he never took any professional advice.

He carried on with his investments as usual, and then the global financial meltdown of 2008 occurred, reducing his investments to half. Worse, even in 2012, six years after his initial investment, the values had not returned to a level that could give inflation-beating returns. This naturally got him worried.

It was then that Banerji came across city-based mutual fund distributor Pallav Tewari, the proprietor of Jayasha Financial Services.

Tewari had a detailed discussion with him and understood the drawbacks of Banerji’s investments. Banerji had mostly invested in lump sum, and they were also not in sync with his goals.

The Process

Tewari first took an assessment of Banerji’s risk profile, goals and the tenure to those goals. Accordingly, he suggested him certain changes in his investment pattern, and also guided him to become an informed investor.

He first outlined Banerji’s financial goals with a pre-defined tenure, reviewed his existing schemes, discontinuing those that were not in sync with his goals, and allocating more towards others.

Lastly, he made him understand the importance of investing through systematic investment plans (SIPs) and how short- to medium-term market volatility should not deviate his focus from his long-term goals. SIPs are a good investment vehicle to tide over market volatility.  

The Impact

Once Banerji’s investments got streamlined, he continued with a disciplined approach with his monthly investments.

Three years later, in 2015, as the markets touched new highs, his portfolio gave him double-digit returns. Banerji was very happy.

But soon enough, as the market corrected again, he became worried. But Tewari advised Banerji not to lose hope and asked him to continue with his SIPs. This continued up to 2020 when the market took a turn for the worse because of the Covid-19 pandemic.

Banerji panicked, as his goals were less than four years away. At one point, he even considered moving his mutual fund investments to safer debt and traditional investment options.

After detailed discussions, Tewari advised him not to do so, as his goal was still four years away and the dip was giving a good opportunity to invest. He suggested Banerji to invest more if he can, with a long-term view

By now, Banerji had started understanding the market dynamics, and decided to go along with his suggestions. Within two years, the markets rebounded beyond anybody’s expectations and touched historic highs, and Banerji achieved the desired corpus for his daughter’s education two years before his actual target.

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The Road To Investment

a) To start with, Tewari outlined Banerji’s financial goals with a pre-defined tenure, particularly his daughter’s higher education needs when she turns 18 and goes for higher education. The corpus required for the goal was calculated taking into account the inflation for the remaining 12 years, starting 2012.

b) Then, he reviewed the existing schemes that Banerji had invested in. As they were not in line with his goals, he suggested him to discontinue them and instead shift to diversified equity schemes. He also suggested him to allocate more towards his daughter’s education needs as the initial investment he had made was insufficient to meet the goal.

c) Third, he introduced Banerji to the concept of systematic investment plan (SIP) as a preferred mode of investment for the long term because of the benefits of rupee-cost averaging, which will help him buy more at low prices in a volatile and range-bound market, and help create wealth for the long term.

d) Accordingly, he suggested Banerji to initiate an SIP in a diversified equity fund with the proportionate amount required for his goals. He also educated Banerji on investing the right amount of SIP rather than just starting one with a random amount.

e) Last, but not the least, he made Dr. Banerji understand the importance of investing in equity for the long term, and how he should not panic because of short- and medium-term volatility, which can, in fact, be very steep at times. The important thing was to keep focus on the long-term goals and average out investments whenever the market turned volatile.

Disclaimer

The financial journey of Dr. Saurabh Banerji is based on the “personal opinion and experience” of Pallav Tewari, Proprietor, Jayasha Financial Services, 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.

Pallav Tewari Proprietor, Jayasha Financial Services