Dr. Abhay Shrihari Deshpande, 54, has been running a hospital in Panchgani along with his wife, who is an Anaesthetist. He had attended an Investor Awareness Program by independent financial advisor, Girish Potdar, in 2008 at Pune. However, mutual funds were not much popular then, and hence, the retail investors did not find much comfort in investing in the markets through mutual funds. Deshpande was also not an exception, and his investment portfolio was dominated by traditional investment products like Life Insurance policies, Fixed Deposits (FDs), and Recurring Deposits (RDs). A part of his investment portfolio also comprised of market-linked insurance products, commonly referred to as ULIPs. With his trust in savings and traditional investment in FDs, he usually opted for taking loans against FDs to meet the funding requirements for his hospital, rather than withdrawing the FD amount.
However, the shift in his investing preferences was destined to happen, and seven years later, Deshpande reconnected with Potdar in 2015 during the latter’s visit to Panchagani. Once Potdar explained about the importance of asset allocation and potential of better returns through mutual funds, Deshpande shed away his reluctance to invest in Equity through Mutual funds. While the financial discussions generally tend to involve a lot of technical terms, Potdar helped Deshpande digest it in an easy-to-understand language.
On discussing the financial plans further with Deshpande, it emerged that the existing savings are not going to be enough for the financial goals to be achieved. Such goals meant monthly savings of around Rs1.50 lakh, but Deshpande decided to start with SIPs aggregating to Rs60,000 per month in equity mutual funds for himself and his wife.
Sensing his concerns, Potdar suggested a diversified SIP portfolio spread across debt and equity, helping to curate a smooth investing experience for Deshpande, and steadily his confidence grew in mutual funds as an ideal investment product. Further, with a wide range of mutual fund schemes on offer, Deshpande found an additional comfort in choosing the investments to suit his needs and financial goals.
Potdar ensured that the preliminary gap between the required corpus and the shortfall in monthly savings is bridged through existing savings. He suggested several simple steps toward financial prosperity. The first step in this direction was to repay the loans against fixed deposits, partially through savings and others through the withdrawal from FDs. Potdar encouraged Deshpande to stay debt-free, to save the interest expenses on loans, and in the process, also staying free from the mental stress of external borrowings.
He also suggested Deshpande to shift his remaining traditional investment portfolio into equity mutual funds and discontinue with the existing RDs. Girish also advised Deshpande to abandon his Market Linked Insurance Products and instead cater to investing and insurance needs through separate instruments, like mutual funds and term insurance respectively. Clubbing these two needs together restricted the flexibility available to Dr. Deshpande, as he had to modify the overall product and could not singly increase the investment amount or the insurance cover. Potdar also suggested investment in NPS to secure his retirement as well as additional rebate for income tax. However, this exercise also helped in the consolidation of Deshpande’s financial portfolio, making it easier for him and Potdar to review the portfolio performance.
A financial advisor like Potdar redefined his financial plans to keep them in sync with his life goals and offered customised financial solutions to match his financial profile. Deshpande also emphasises on the role of financial advisors, especially in volatile markets. He said, “Girish not only analysed my specific needs and aspirations but also considered my investing preferences to devise a suitable strategy, which helped me be comfortable with mutual funds and set the right expectations for my investments. I believe my financial goals are not much far from getting achieved, especially with Girish guiding me across my journey with mutual funds.”
With an emphasis on the periodic portfolio review, Deshpande has been ensuring that he meets Girish at least once a year. Within a short span of four years, Deshpande has doubled his monthly SIP to Rs1.20 lakh and the portfolio has almost touched Rs1.50 crore. Further, to cover the insurance needs for the family, they avail the free insurance cover available for their SIPs with the SIP Plus and CSIP features advised by Potdar.
Given the monthly savings, the investments corpus would have been much bigger, had he started investing earlier due to additional savings and the power of compounding. The benefit of compounding magnifies as we provide more time to investments in the market. Deshpande might have been late in starting to invest in mutual funds, but as he says, it is better late than never.
Further, with an inclination to correct the investing strategy, he has been eager and curious to stay involved in the entire process. While he got late to enter into this investing process, he has ensured that his daughters, right now into the early stages of their professional career, board the investing journey right away. As such, he started involving his daughters into the family’s financial discussions, and now his elder daughter funds her investments from her earnings. He also expects his younger daughter to follow suit, once she starts earning. What began as an investment strategy for Deshpande has snowballed into a plan for his entire family.
Deshpande encapsulated his entire experience in brief, “Just like you consult a doctor for your health issues and Chartered Accountant for your tax-related compliances, having a financial advisor is important to guide you through your financial plans. However, make sure your advisor provides you with insights into the strategic process of goal-based financial planning, instead of selling you another investment product. As Girish helped me correct my investing strategy to sync it with my financial goals, you must also choose an advisor who brings you on the path to achieve your financial goals.”
One must stay committed to his or her financial plans and goals, and that is precisely where financial advisors play a significant role – in reinforcing the trust of the investors during volatile times and helping them to stay on the right track in their investing journey.
Disclaimer
Financial Planning of Dr. Abhay Shrihari Deshpande is based on the “personal opinion and experience” of Girish Potdar and that it should not be considered professional financial investment advice. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence.