Back‘I now understand financial products better, and can even spot misselling’
Sadhana and Sandip Shimpi knew they could do better with their money. They just didn't know how
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It all started with blogs. UAE-based Sandip Shimpi knew that he could do better with his money. “I had been working for some 15 years and I realized I wasn’t reaching anywhere even though I was earning enough," said Sandip. To know how he could change this, he started reading some blogs. “I liked what Melvin (Joseph, financial planner) was saying. I thought if this man is giving such good advice for free, what will it be like if I paid a fee," recollected Sandip. The 37-year-old also felt that he needed expert advice for his investments. “Just the way my employer depends on my technical expertise, I also needed advice from an expert."
Sandip got in touch with Melvin. “For the very first meeting, he asked me to get some data. He said if I was happy with the advice, we could continue. In just 30 minutes of the meeting, he had pointed out a few mistakes I had made," recalls Sandip. Sandip realized he had come to the right man.
A high-priority change was streamlining life insurance policies. “Some of the policies I had were not needed. I had bought those from a family friend," said Sandip. Instead of a multitude of low-value policies, Sandip now has a term plan of Rs1 crore.
The Shimpi family, which includes the couple’s two daughters—5-year-old Sanvi and 3-month-old Bhagyashri—also needed adequate health insurance. “I was advised to buy our own policy even if the employer provided one," said Shimpi. The reason was that if Sandip were to be unemployed, the health cover would continue.
This factor was also the basis for building an emergency fund. “Our jobs are never safe. It may be that I don’t have a job for even 6 months." For this reason, Sandip and Sadhana have consciously built an emergency fund to take care of at least 6 months’ expenses.
The couple also wanted to plan for their retirement. “He (Melvin) explained to me how Rs50,000 of today would be like Rs2 lakh a few years later. This opened my eyes," said Sandip. As a result, the couple decided to create a larger corpus for their retirement.
Among the more near-term goals were the two daughters’ education, for which Sandip and Sadhana have chosen to start 2-3 systematic investment plans (SIPs) in mutual funds.
Sandip and Sadhana, who have been consulting their financial planner for about one-and-a-half years, feel they now not only have a better understanding of their financial goals but also products and terminology. “I can spot misselling now. I even ask for data like XIRR (a way to calculate return for multiple investments made at different points in time) if someone comes to me with a product," said Sandip.
Even with SIPs, Sandip has chosen direct plans. “Melvin told me ‘I will not spoon-feed you. You are a qualified person; you can fill the SIP forms yourself’." So, while the two selected the mutual fund schemes together, Sandip filled the forms all by himself. “In the long term, the saving is huge (direct plans have lower expense ratio)," he said.
Another choice that the couple made was to start paying off their home loan in India, instead of directing their money towards investments. “I wanted to get rid of the loan. So, we decided to focus on investments from the next year," said Sandip.
The choice extends to what the investments should be. “I had bought some stocks, but have sold them now. I can invest wherever I want; the only thing that Melvin has asked me to do is to cross-check with him," said Sandip.
“Earlier, we used to spend our money here and there, and all the money would get spent. Now, we are saving too. The whole process over time has made us financially stable. We are not worried about the future. Our daughters’ needs will be taken care of," said Sadhana.
The Shimpis stay in the UAE and their planner is in India but the distance has not been a hindrance, said the couple. “Initially, I was skeptical about the distance but it didn’t play a role," said Sandip.
The financial planning process has meant that Sadhana and Sandip know where they stand and where they have to reach. “We used to worry a lot earlier. Now, we are confident," said Sandip.
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