Nirmal Krishnan (45) is a medical practitioner who has a small family with his wife Nimmi Nirmal and two children - a son Pranav and a daughter Malavika. Being responsible parents, they had desired to have a stable financial future for their children and for their own retirement as well. For the same, they knew that investments were important to financially secure their future.

However, being a busy medical professional, it was difficult for Dr. Krishnan to make prudent investment decisions. Moreover, with a plethora of available investment avenues, he did not know where to put his money to yield the desired results.

Meeting with Mr. Varghese

In 2016, Dr. Krishnan met Richie Varghese, his mutual fund distributor. As a seasoned investment professional Mr. Varghese gave a patient hearing to Dr. Krishnan and understood the latter’s needs, risk appetite, future goals and psyche towards investments.

Dr. Krishnan had just crossed the mid-30s age bracket and was understandably concerned about his money management. “I had the realisation that I was clearly a bit late and could not afford to delay it any further,” recalls Dr. Krishnan.

Mr. Varghese knew how to navigate Dr. Krishnan. “ The best part was he followed ‘better late than never’ principle. After meeting him, I could sense that he had a desire to build a sizable portfolio and had a fair understanding about why investments were important. This worked well for me,” says Mr. Varghese.

Focus on Financial Education

To begin with, they discussed in detail about discipline, patience, consistency, goal-based financial planning and most importantly the various asset classes and their market cycles. Along with it, Dr. Krishnan was apprised about benefits of asset allocation strategy through diversification. “Educating clients is one of the most important aspects which we continuously work towards. This helps clients stay for the long-term and are focused on goals. In fact, educated clients make my work easy,” quips Mr. Varghese.

Investment Strategy

After a couple of meetings, Mr. Varghese recommended to the Nirmals that they should invest through mutual funds. As an investment vehicle, mutual funds have all the investment strategies and basics inbuilt in them. “Risk management in the investment portfolio is one of the top priorities. And it is needless to say that mutual funds are well-equipped to take care of this aspect of investment,” elaborates Mr. Varghese.

Looking at the family’s liquidity situation, the Nirmal family was suggested to start their investment journey with a systematic investment of Rs 50,000 on a monthly basis. Mr. Varghese cherry picked a couple of mutual fund schemes for the Nirmals which were suitable for long-term wealth creation in accordance with Dr. Krishnan’s risk taking capability. While doing so, Mr. Varghese ensured that asset allocation strategy is well in place in order to weed out the concentration risks from the portfolio.

Investment journey till the Pandemic hit in 2020

Though the systematic investment journey began on a good note, the markets entered a long consolidation phase during 2016-2018. The volatility did not let the investment grow as per the expectations. Dr. Krishnan turned a bit worried as he could see not much of an appreciation in his portfolio. Mr. Varghese readily understood the psychology of Dr. Krishnan and strongly hand held him during such times.

“The majority of the investors tend to lose their patience when they see not much rise in their investments, Mr. Krishnan was not an exception,” reminisces Mr. Varghese. He explained that markets do not always perform in a linear fashion and such periods should, instead, be taken as opportunities to average out the cost of investments by continuing SIPs. Dr. Krishnan understood the logic and decided to continue. This strategy ensured that Nirmals accumulate more units at lower prices which would help in offering high compounding returns when the market cycles go upwards.

The Market Crash during the Pandemic

Though Dr. Krishnan continued with his investments, he was not getting satisfaction. But little did he know that he would see the worst time for his portfolio during the Pandemic. As the lockdown was announced and Pandemic spread, the steep erosion in the market in no time unsettled Dr. Krishnan. Mr. Varghese quickly came to his rescue and advised that it was not the time to exit but to invest more. The suggestions worked and Dr. Krishnan agreed to do so.

In April, 2020 while the markets lost nearly a third of the value, upon Mr. Varghese’s advice, the Nirmals put in a lump sum of Rs 7 lakh. This triggered the turnaround in Dr. Krishnan’s portfolios. In one shot, he was able to accumulate units at levels he did not witness since he started his investment journey. Meanwhile, he continued with his monthly SIPs which further helped him gather more units at lower valuations. “I reminded Mr. Krishnan about his financial goals and suggested to continue with SIPs patiently,” says Mr. Varghese. He was well aware that investment executions were done pretty well and now there will be only one outcome — robust growth.

Achievement of Target Amount

Mr. Varghese’s vision came true. Within a year when the market bounced back and not only recovered the lost ground but scaled over 50% more, Dr. Krishnan could see the moment he was waiting for all along. The value of his portfolio hit his target of Rs 1 crore mark. The additional purchases done during the pandemic readily helped Dr. Krishnan achieved his target. The Nirmals are a happy family today and they give credit to Mr. Varghese continuous support and vision for making their financial goals come true.

Lessons to be Learnt

It was an eye opener experience for Dr. Krishnan as he could actually see the fruits of wealth creation. “I am thankful to Mr. Varghese for making my financial dream come true. Without his guidance, it would not have been possible to reach my target,” says Dr. Krishnan.

According to him, it was a great learning experience. “While staying systematic and patient, we must link your investment in mutual funds to our goals. Apart from this, one needs to select schemes as per our goals. Above all, we need to trust our financial planner,” concludes Dr. Krishnan.

***

Lessons to be Learnt:

• Dr. Krishnan desires to attain financial goals but not sure where to invest
• He meets Mr. Varghese, his financial planner, and agrees for systematic investments through Mutual Funds in 2016
• He is recommended to put Rs 50000 on a monthly basis
• He is informed about investment basics and knows patience is the key
• First four years Dr. Krishnan could not see much of a growth
• He was advised to keep patience and not exit
• During the Pandemic, upon Varghese’s advice, he invested a large lump sum
• Within a year, as the market bounced back, he could attain the target of Rs 1 crore
• Investment in Mutual Funds must be linked to goals
• Patience and trust on the advisor is the key for successful financial journey

By Richie P Varghese Founder, TRUSTINVEST Financial Services

Disclaimer

The perspectives and insights presented in this article reflect the personal views of Mr. Richie P Varghese, Founder of TRUSTINVEST Financial Services, and may not align with those of Outlook Money. The case study discussed is based on Mr. Varghese’s experience with his client, Nirmal Krishnan. The financial results mentioned are unique to his situation and may not apply to every individual. This article is designed to provide general information and is not a substitute for professional investment advice. Readers are urged to consult with a certified financial advisor before making investment decisions based on the information provided in this article.