Two simple goals that his mother, Sukumari Amma, followed when he was just a kid became financial gospel for Venkatesh Babu through his life. “My mother had two simple financial goals—to remain debt-free and own a house,” he says. Years later, this firm foundation in financial planning helped him tide over tough times and build a more organized financial life for himself and his family. “My financial journey has been pretty rocky but has been enriching, too,” he says.
Childhood struggles: Babu remembers a financially unstable childhood, narrowly salvaged by his mother. “My dad ventured into different businesses without understanding the risks involved. As a result, he accumulated a lot of debt. In view of mounting debts, my mother took it on herself to bear the expenses of me and my sister,” he says.
Tough start: Now an information technology professional, Babu’s first job was a low-paying one. “I dabbled in several initiatives, such as running a chit fund and venturing into an electronics retail business, to improve my financial status,” he says.
Two years of unsuccessful attempts at starting a business taught him the value of sound financial planning. “Business was not helping me meet my financial goals, so I returned to a salaried job,” he says.
Eye opener: That was a turning point in Babu’s life as far as his savings were concerned. “I realized that saving was the only way and also understood the value of compounding,” he says. He started maintaining all his records diligently and made investments primarily in real estate and unit-linked insurance plans (Ulips).
Later, he moved to the US. He kept up his efforts at organizing his finances there too, but the downturn in that country led him to seek professional financial help.
“I had accumulated a reasonable amount of assets and watched my assets diminish rapidly. It was then that I sought professional help for a long-term financial plan,” he says.
Before he met Shankar S., financial planner, Credo Capital, Babu worked hard towards maintaining his finances himself, but his portfolio suffered from some typical problems. The planner helped him solve these.
“I made the same mistakes that every new investor makes. My portfolio was not sufficiently diversified and was skewed towards individual stocks and real estate. I had very little exposure to debt instruments. I had fixed deposits that gave me rates that hardly kept up with inflation,” he lists the problems in his portfolio.
Moreover, his investments were concentrated in the US.
Diversification: Shankar helped him carve out a steady course based on his age and risk appetite. The first step was to diversify the portfolio. Babu already had investments in real estate, individual stocks and fixed deposits. While Shankar added mutual funds and debt instruments, he made Babu trim his stocks portfolio and pull out from some high-risk investment vehicles.
“Almost all my investments were in the US. Now, I have investments across markets and asset types,” he says.
Controlling expenses: “Shankar made sure that my expenses were got under control. The best part was that I didn’t have to change my lifestyle much.”
Babu has now migrated back to Chennai. “The plan helped make my move comfortable,” he says. Once we had the investments in place for a while, Shankar helped readjust my portfolio for optimal performance.
Years of planning, now backed by professional advice, makes him confident of supporting his dependants and fulfilling their dreams. Babu now feels in control, but still draws his strength from his mother’s struggles. “I owe my success to my mom,” he says.