Why Is Goal-Focused Investment Key To Long-Term Wealth?

Home »  Magazine »  Why Is Goal-Focused Investment Key To Long-Term Wealth?
Why Is Goal-Focused Investment Key To Long-Term Wealth?
Goal-Focused Investment Is Key To Long-Term Wealth
Neeraj Chauhan - 01 November 2022

Sudhir Kochhar, 49, runs a travel agency. His family comprises his wife, daughter Samiya (19), and son Shrihan (12).

He counts himself as a happy and satisfied investor. His investments are goal-based, and he is also disciplined in his approach towards investing.

Kochhar began investing in mutual funds about eight years ago. Since then, his portfolio has grown at a compounded annual growth rate (CAGR) of 13.8 per cent, with the debt-to-equity allocation being at a healthy 22:78 ratio.

It was in July 2014 that Kochhar was introduced to Neeraj Chauhan, a mutual fund distributor and proprietor of The Financial Mall, a financial services firm.

Says Chauhan: “One of our clients referred me to Kochhar. I was pleasantly surprised to see his desire to achieve certain goals, such as  children’s education, retirement, and financial freedom. He was quite sincere and clear-headed about his goals and the time frame.”

Kochhar was also very open to discussions, and shared detailed information with Chauhan to help him work on the financial goals. This helped Chauhan to figure out both Kochhar’s needs and his risk appetite.

According to Chauhan, Kochhar was around 41 years old at that time and his children were aged just 11 and 4, respectively. He also realised that he had limited time at hand to fulfil his financial goals.

At that time, Kochhar listed the higher education of his children as his top priority. Chauhan made detailed notes of Kochhar’s income, expenditure, assets, liabilities, and a timeline of his quantified goals.

Says Chauhan: “He had a plan, but did not know how to execute it. I guided him as I knew that no planning, however foolproof, would reach its logical conclusion without successful execution.”

Chauhan suggested a monthly investment of Rs 20,000 through systematic investment plans (SIPs). As Kochhar got a better understanding of how SIPs work, Chauhan increased the SIP amount.

Says Kochhar: “Since I am very sincere about my investments, I would regularly review my portfolio at defined intervals. I realised that my existing SIPs were insufficient to meet my long-term goals. So, I kept increasing the amount of investment as the years passed, under the guidance of Chauhan.”

Kochhar never stopped his investments, as he strictly believed in the power of compounding. This also meant he was not perturbed by the uncertainties of market volatility, as Chauhan had worked on setting his expectations at the beginning itself.

“Rather than putting in a lot of energy in tracking his portfolio daily, Kochhar focused on his business to keep a steady inflow of income,” adds Chauhan.

During the first three years, despite stagnation and volatility in the market, Kochhar’s portfolio grew at more than 15 per cent CAGR. However, during the 2020 pandemic, amid the great fall in the month of March, the overall CAGR dipped to 6.24 per cent. Kochhar’s business was severely impacted as well, as the pandemic disrupted the tourism industry.

Though he continued investments for the initial few months, his financial condition deteriorated as the pandemic persisted longer. Chauhan then decided to make some adjustments in the investments.

“With no income, it was obviously difficult for Kochhar to run his house and meet other expenses. We helped him withdraw some quantum from his investment to take care of his daily needs,” says Chauhan.

Chauhan also realised the task and responsibilities he had in helping and guiding Kochhar to tackle and navigate through the turbulent phase.

“I reassured and counselled Kochhar by discussing and showcasing the historical data during the past catastrophic events. I explained that this phase would pass too, but, more importantly, I needed to stick to the basics while avoiding any panic-led investment decisions,” says Chauhan.

Kochhar gave a patient hearing and did not digress from the path of wealth creation despite all the noises around. This worked well for his portfolio, too. As things began to normalise with the withdrawal of restrictions, Kochhar resumed his contribution to his previous level.

A sharp and quicker-than-expected recovery in the markets took his portfolio valuation even higher. This was a practical learning for Kochhar. He understood that one should not worry about the corrections, and that such phases should be used to at least stay put if not invest more.

Kochhar’s daughter is now in college and her education costs have been taken care of, as his investment plans are back on track. His son will turn 15 in the next three years. Kochhar had wanted to accumulate a sizeable corpus for his higher education. With the current investment strategy, he would face no financial crunch in fulfilling the requirement. His next goal is to achieve financial freedom and he has started working towards that now.

Chauhan has also ensured that Kochhar is adequately covered for his life and health risks to eschew any sudden outflow from the accumulated corpus during an emergency.

“I believe that the successful accumulation and progress of Kochhar would not have been possible if he did not have trust in us. His exemplary discipline, persistence with investments, and unshakable focus on goals helped yield the desired results thus far,” adds Chauhan.


Lessons Learned

Here are the lessons to be learned from Kochhar’s investment journey:

a) Goal-Oriented Investments: One should sync one’s mutual fund investments with one’s financial goals. Else, it will be difficult to continue and sustain the investment for long.

b) Choose Schemes Suitably: Depending on the goals, suitable schemes should be chosen to make the investments fruitful.

c) Avoid Tracking Investments At Short Intervals: Frequent portfolio reviews will hamper proper investing. One should not get bothered by the market noise. One should review the portfolio with one’s advisor once a year and take necessary corrective actions, if needed.

d) Patience And Trust: One should not take panic-driven actions. Consistency and patience are the keys. The most important aspect of a happy investment experience is to trust one’s financial advisor. During troublesome times, advisors will help you remain on the right track.

Neeraj Chauhan, Director, The Financial Mall


The financial journey of Sudhir Kochhar is based on the “personal opinion and experience” of Neeraj Chauhan, proprietor, The Financial Mall, and 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.

Tata Motors’ Range Of Trucks: Leading Ahead Towards A Safer Era Of Mobility
Building Portfolio With Exchange-Traded Funds