After the 2008 setback, it took eight years to look back to equity

However, the Mahajans kept saving; in fact, more so after their losses in 2008. Just that they had lost the confidence to invest in equity again

We have all heard stories of fortunes being lost when a market crash happens. For those who lose that money, the confidence in the markets is completely shaken and it could take a long time to overcome the fear and anxiety. Something similar happened with Swati and Vinayak Mahajan from Bhusaval in Maharashtra, and they have only recently regained some confidence to invest in the equity market again, after a hiatus of over 8 years. 

2008: equity woes

The doctor couple started making investments at the beginning of their career, in early-2000s. From starting their practice in year 2000 till 2005, they focused solely on building their hospital. So when that goal seemed close to completion, in 2005 they started investing in mutual funds. “During the 2008 crash, I panicked and liquidated all my investments at a loss. The impact was such that until 2016-end, we did not invest in equity mutual funds. We invested only in real estate, bank deposits, PPF (Public Provident Fund), postal deposits and some money in debt funds," said Vinayak. 

Need for planning 

With their daughter’s (15) higher education approaching fast, they felt a need to get things organised and sought advice from Melvin Joseph, a Sebi registered investment adviser, and founder, Finvin Financial Planners. “We discussed some things over a call and then he sent me a questionnaire on my background and existing investments. He then came up with a detailed financial plan and since then we are investing according to that," Vinayak said. 

“We have never met in person; we keep discussing in detail over the phone itself. We now have an assurance that we have a mentor who can take care of things, even if something goes wrong. We have got the confidence that even if there is a crash, the losses could be overcome over a period of time. We have got the confidence to get into equity funds," he said. 

Goal-based plans

The Mahajans kept saving; in fact, more so after their losses in 2008. “It is not that I stopped saving money. Just that I had lost the confidence to invest in equity again. We were saving money, but it was not channelized properly towards specific goals," he said. For the immediate goal on daughter’s graduation, which is around 3 years down the line, they have been advised to maintain investments in debt funds. “And the funds required for her post-graduation and our 12-year-old son’s higher education, which will be needed after more than 5 years, he advised to invest in equity mutual funds. As per the amount required, we planned in detail on SIPs that should be done in different funds," Vinayak said. 

In 2016, the family had around 30% of its investments in debt funds and the rest was in fixed deposits, PPF and postal deposits. “We kept the debt funds and moved the other money to equity mutual funds. But we maintain a large part in debt as we started our planning very late and some of our major goals are within 3-5 years," Vinayak said. The other goals for the couple are their daughter’s marriage and their retirement. “Accordingly, around 50% of our SIPs are in debt and the remaining 50% are in equity funds. This is apart from some lump sum investments which go in to equity funds. Our portfolio does not have any balanced funds; it's either equity or debt," Vinayak said. 

They have also made some corrections in their investments. “One important suggestion to us was to move our investments in older debt funds from regular to direct plans as the former could reduce my returns due to recurring commissions. We have completed that shifting now and our equity investments are only in direct plans," he said. Also, the couple has stopped premium payments for their endowment plans, though they have not liquidated the policies. 

The takeaway 

The fear of the money lost in the past is now gone, though it took a long time, Vinayak says. “The biggest change for us has been that of mindset and vision to think about the goal and not profits on a specific investment. Counselling that investments in equity need to be long term and that if we remained invested for 7 years or more, we will have little risk even in equity funds helped us a lot," he said.

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MY PLAN

Name: Dr Vinayak Mahajan

Age: 45

Profession: general surgeon 

Name: Dr Swati Mahajan

Age: 43

Profession: ENT surgeon

Financial planner: Melvin Joseph, Sebi registered investment adviser and founder, Finvin Financial Planners

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