When 44-year-old Karmakar Shetty began investing, he took his decisions but was influenced by a close relative. But soon he realized that try as he may, the borrowed strategy wouldn’t work for him the way it did for his mentor.

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Problems and solutions

Insurance: Shetty faced a problem that most insurance shoppers face. He was under-insured. He had invested in just one endowment plan. The premium was not high, but the cover not adequate either. The planner advised him to get adequate insurance through a term plan and also an accidental insurance cover.

Real estate: A large chunk of his investment was in real estate. “My uncle was a businessman and being a restaurateur, investing in properties worked wonders for him, but not for me," he says.

He liquidated some of his money locked in properties and used it to repay personal loans and other debts but the timing of sale led to some value loss.

Equity: Shetty was not averse to investing in equity, but he didn’t abide by a very basic principle in equity investment: “Don’t put all your eggs in one basket." His equity portfolio consisted of shares of just one company and lump sum investments in two-three open-ended mutual funds.

The planner helped him redesign his equity portfolio by reinvesting in systematic investment plans (SIPs) of mutual funds customized to his time horizon and needs. Shetty now boasts of a well-diversified portfolio with investments in both mutual funds and direct equities.


Clarity in planning: Like most planners do, Shetty’s planner had a chat with him before drawing up a plan to understand his financial goals and the corresponding monetary requirements and timelines. “I knew what I wanted, but never factored in the costs so elaborately. The planner calculated not just what the costs involved, but also factored in inflation," says Shetty.

Apart from investing for his children’s education and marriage and retirement, he is also saving to renovate his house and upgrade to a better car in the next few years. “I will soon begin the renovation of my house. Earlier, I was planning to wait for a few more years and do it together. Now I will do it in a phased manner."

Streamlining expenses and debts: The planner helped him improve the efficiency of his returns. For instance, Shetty explains, “I had a loan against property and it was redundant because I was bearing an interest on it and unlike a home loan, it didn’t offer me any tax benefits either."

So the planner helped him liquidate his investments in direct equity and repay this amount. “The instalment stream that was freed up started going into regular SIPs, instead of ad hoc avenues."

Rational approach: Some of Shetty’s investments were driven by emotional pulls. “One of my first investments was in an initial public offer, which I kept for almost 15 years," he says. Being his first investment, he was a little reluctant to liquidate them but the planner convinced him that since he had held the shares for long, both its price and value had increased substantially and it was a good time to liquidate them.

“He convinced me that I should sell them while they were doing good, because if the prices fell for any reason then I would lose all my money," says Shetty.

With a clearly chalked out road map, he now strides along the path a lot more peacefully.

Best Advice

What worked for others may not work for you. Investments differ according to various needs