Maheshkumar Sadashiv Bhandare, 49, works with a reputed firm in Nashik. His family comprises of his wife Santoshi, and two daughters, Purva and Prachi, who are in their teens. Maheshkumar’s first rendezvous with mutual funds was in 2006 when he invested some amount as a lumpsum. However, his investing strategies were random at that time. A couple of years later, when the global financial crisis triggered a steep correction in the equity markets, he met Tushar Amrutkar, financial advisor, Bhushan Investment & Financial Services. Maheshkumar was worried because his investment portfolio was showing losses after two years of investment.

The first step was to convince Maheshkumar to stay invested in the markets and in fact, invest more as the markets were trending lower. Another step was to review the financial goals and modify the investment strategy accordingly. Tushar shares, “When we first met, Maheshkumar already had some exposure to mutual funds but the sharp correction in the markets had made him nervous. Thus, the first thing we did was to reinforce his conviction into equity markets.”

The first few interactions focused on fetching information on Maheshkumar’s goals, which were mostly around his daughters and having a healthy and comfortable post-retirement life. His long-term goals included retirement planning, education planning for both daughters, building funds for their marriage and purchasing a bigger house. His short-term goals included family vacations and upgrading his car.

However, a vital ingredient of having a prosperous financial life was missing from Maheshkumar’s plan—an emergency fund corpus. That became another financial priority.

With these financial goals mapped out, Tushar and his team formulated a prudent plan for Maheshkumar. They started with a systematic investment plan (SIP) of Rs 20,000 per month for long-term wealth creation. However, registering an SIP and investing regularly was just half the job done. Tushar ensured that the portfolio was reviewed at least once a year, which helped replace the underperforming schemes with better ones.

However, the more challenging task at hand for Tushar was to guide Maheshkumar through the investment journey. During the first five years of investing until 2013, Maheshkumar was worried about his investing strategy, as his SIPs gave just around 5 per cent annualised returns. He had also started comparing such returns with the returns one would have earned by investing in fixed deposits and recurring deposits.

Tushar shares, “Maheshkumar would make regular calls to our office to convince us to stay out of the markets and instead shift his portfolio to fixed-income products. He found it rational to compare his meagre returns with higher fixed deposit rates, where the investment risk was almost insignificant. However, we continued to remind him about his goals to start SIPs instead of focusing on daily NAV (net asset value) movements.”

While Maheshkumar was not fully convinced about staying invested in the markets, especially given the lower returns he was seeing in his portfolio, his belief in the markets strengthened through regular interactions with Tushar and his team. This helped him continue his SIP investments as well.

Maheshkumar’s persistence with SIP investing has reaped healthy dividends, as he was able to participate in the market rallies post 2013. From around 5 per cent annualised returns till 2013, his current annualised SIP returns are around 19 per cent since he started investing through SIPs.
The later rallies have more than compensated for the few years of stagnant returns.

With healthy portfolio returns, Maheshkumar is now planning to upsize a few of his goals for a more significant investment corpus. And this is not an exception in the markets. Everyone can plan their investment journey prudently and diligently and achieve their larger-than-life goals effortlessly. Happy investing! 

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Sitting on healthy SIP returns, Maheshkumar has effortlessly funded his daughters’ education plans—in 2018 for Purva and in 2021 for Prachi—using around Rs 45 lakh altogether. Maheshkumar shares some key lessons from his investment journey:

1) Link your goals with SIPs – “It is always helpful to link financial goals with specific SIP investments. This helps you stay motivated to invest, even when some part of the investment period leads to stagnant returns. I would have probably stopped my investments mid-way if they were not goal-specific,” says Maheshkumar. Aligning SIPs to goals also helps investors choose mutual fund schemes that are best suited for the financial goals and the investment horizon. While some schemes may be suitable for short-term investments, others may be more suited for long-term investing and wealth creation.

2) Patience is the key to financial prosperity – Warren Buffett once said, “Our favourite holding period is forever.” Similarly, investing in equity funds is not like waving a magic wand to make significant returns appear over a shorter period; it’s about staying patient across market ups and downs. Maheshkumar is sitting pretty with healthy returns from the 13 years of investment, which is far away from the meagre returns he saw over the first five years. He would have missed the strong market rally post that period if he had stepped out of his investments after the first five years. Patience is the key to financial prosperity over long term.

3) Financial advisors play an essential role in financial planning – Just the way one goes to a doctor to take specific medical advice and to a lawyer for personal legal advice, one should consult professional financial advisors to get guidance on investment journey. Advisors help investors chalk out their financial plans and are instrumental in handholding them during periods when the conviction is shaky about equity markets. In the absence of prudent financial advice, one may make hasty decisions to stay out of the markets and liquidate all such investments. Such risk-aversion may cause the investors to miss future market rallies. This is where the role of financial advisors assumes prime importance, in terms of guiding and mentoring clients through the ups and downs in volatile markets.

Disclaimer

Financial Planning of Maheshkumar Bhandare is based on the “personal opinion and experience” of Tushar Amrutkar, Financial Advisor, Bhushan Investment & Financial Services. 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.

Tushar Amrutkar, Financial Advisor, Bhushan Investment & Financial Services