It’s easy to follow a financial plan—or to financially re-engineer our money box—if we don’t have too many demands and our wants are at a minimum. But how do we implement a plan if we have a certain lifestyle and want to maintain it? That’s the dilemma that Bengaluru-based couple, Revathi Anantharam (42) and Gautam Ramprakash (48), found themselves facing. And it wasn’t easy for their financial planners, Anup Bansal and Nandita Jaiswal, of Mitraz Financial Services Pvt. Ltd, either.

Revathi and Gautam are both information technology professionals and have earned a good income over the years. While Gautam had moved to Dubai in 1992, Revathi joined him there in 1998. Both of them came to Bengaluru in 2006. Gautam loves luxury cars and superbikes, especially the latter. Revathi loves travelling; she often takes 1-2 trips every year. Although the income was enough to fulfil the couple’s many dreams, Revathi noticed that they weren’t saving enough. “We were living a sort of hand-to-mouth existence. Our expenses were high. I started to wonder if we are saving enough for our future," said Revathi. The couple has a daughter aged 11, whose education also needed to be planned for. Her friend suggested they go to a financial planner. That was 2016. 

One of the first things the planners noticed was the couple’s love for real estate. Apart from the independent large house they live in, they had another apartment and a land in Bengaluru. Revathi was a senior executive at ITC Infotech India Ltd at the time and had fixed deposits and ITC Ltd’s shares as employee stock options. She had no other investments in equities. They also had a personal loan they had taken a few years ago, at 16% interest rate and were paying about 40,000 as EMI.

The couple’s first need was annual tax filing. Over the years, due to Gautam being away in Dubai, Revathi had increasingly found it difficult to file taxes on her own. Next was how to repay the loan. The planners used the proceeds from the sale of an apartment the couple had just sold. “The loan was a burden. It prevented me from leaving my job and pursue other interests because of fear of loss of income," said Revathi. “It’s not bad to be invested in real estate per se, but no portfolio should be skewed towards real estate. A healthy mix of equity and debt instruments is necessary for long-term wealth creation," said Bansal of Mitraz.

Then came life planning. The planners probed the couple about their life goals, beyond the traditional retirement, child’s education, and so on. An established concept in the US but an emerging one in India, life planning nudges people to think more about why they want to save and express their innermost desires—no matter how implausible they may sound at first—they want to fulfil out of their savings and then work towards achieving them.

Due to their love for real estate and a high-end lifestyle, it was difficult for the couple to curtail their expenses, be disciplined and at the same time, channelise increasingly in financial instruments. “It takes time to build trust but we did that over time," said Revathi, who added that she cut down on her “extravagant" expenses like home décor, artefacts, things she indicated she used to buy often. 

While Gautam’s passion for cars and bikes continues, the planners at least made them more disciplined about investing and got them started with SIPs. Before the couple met Mitraz, they used to invest just 20% of their collective income, and predominantly in fixed deposits and real estate. Now, they invest 65% of their joint income in a mix of equity and debt mutual funds, including liquid funds for short-term needs and direct equity shares as well. 

The couple invests for short-term as well as long-term goals through SIPs. Bansal tells us that the couple's equity allocation at the moment is 10%, up from just 5.9% before the plan was made. The target equity allocation in the couple’s portfolio is 27%, which Bansal says will be reached eventually through SIPs in mutual funds.

***

Mistakes I won’t repeat

1. Investing in real estate excessively

2. Buying insurance policies for investment purpose

3. Buying lottery (lost almost 5 lakh in the Middle East)

4. Keeping excess cash in savings account

Close