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Hemant Mishra/Mint
Hemant Mishra/Mint

We learnt to put our scattered money box in order

Bengaluru-based couple Shalini and Sunil Vashishta of how their financial planner helped them in streamlining their investment portfolio and expenses

Name: Sunil Vashishtha

Age: 47

Profession: manager at a technology company

Name: Shalini Vashishtha

Age: 44

Profession: associate professor

City: Bengaluru

Financial Planner: Rohit Shah, founder and chief executive officer, Getting You Rich

The Vashishthas were financially comfortable. The family earned well and had planned for the higher education of their two children: son Jai (17) and daughter Tanisha (9). Despite a money box being present, Sunil wasn’t convinced of his money management decisions. When he came to know of his close friend’s financial planner Rohit Shah, he got in touch for professional advice.

The gaps

Around 70% of Sunil’s investments were in fixed deposits and very little in mutual funds. Also, for health insurance he just had his office medical cover (Rs5 lakh family floater): a critical mistake that financial planners warn of. The biggest sour point of Sunil’s portfolio was his real estate investment. He had invested in a flat in Bengaluru in 2008—apart from the one where he and his family currently live in—thinking it would appreciate over time.

Although he recently got possession of the house after multiple delays by the builder, the value of his flat hasn’t appreciated much. Sunil had modest holdings in mutual funds but the portfolio was over-diversified. In short, his portfolio was not consolidated.

Course correction

“Shah made me realise that liquidity is a big problem in the real estate market. So now, I am planning to sell it and invest the proceeds in mutual funds," said Sunil. He also consolidated his mutual fund holdings, moved a portion of his deposit holdings to debt mutual funds and invested in a portfolio management scheme. “Earlier, I used to invest in equities based on hearsay. It wasn’t organised. I don’t buy equities and mutual funds anymore like that," added Sunil.

Given his income level and the important role that his salary income plays in the family, Sunil bought a term plan of Rs50 lakh, which is in addition to his earlier plan of Rs50 lakh. He also bought a health insurance cover of Rs10 lakh (family floater). Expenses also started to get streamlined. “Earlier, if my house needed something, we used to buy it without assessing if we really needed it. But after we started documenting our expenses, we got more conscious. Like a change of washing machine, buying a new fridge and so on; we now ask ourselves if we really need to do all these things," he said.

The lessons

As both Shalini and Sunil work in the private sector, they know they won’t get a pension after they retire. “Hence, coherent retirement planning is needed. So we came up with a number, taking into account our lifestyle, our expenses post-retirement as well as other ambitions like holidays and upgrading a car. Based on such calculated assumptions, our investments and spending are now structured," said Sunil.

Shah said Sunil was missing goal-based planning, “so we sharpened the focus and brought order to the way he managed his money box."

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