BackFinancial planning has helped us realise what we want to achieve
With financial planning, Vijay and Nithya have created a portfolio that is more liquid, helping them pursue their entrepreneurial goals
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Vijay Balasubramaniam is a thinker. He takes thinking very seriously. A software professional for around 18 years and having lived abroad in the past, Balasubramaniam wants to change the way children think. He explains: children are taught in such a way growing up that they end up developing their left side of the brain. The right side of the brain, he says, is underdeveloped. What Balasubramaniam means is that the children, though creative, aren’t taught how to tap their creativity, which is the domain of the human brain’s right hemisphere.
“Children are far more intelligent than you think. But they are also far less mature when it comes to taking sensible decisions," he said. His wife Nithya shares his passion, and together they wanted to start an outfit where kids learn how to think. The problem was: where to get all the money to sustain a venture like this and, if Balasubramaniam were to join it in the future, which he aspires to do someday, would the absence of salary income hinder their lifestyle?
That was the least of his worries. When he walked into the offices of Mitraz Financial Services Ltd in 2015, his planners Varun Girilal and Binoy D’Cruz were a bit concerned about his portfolio. Nearly 95% was invested in real estate (multiple land plots and a 3 bedroom-hall-kitchen unit in Bengaluru) and just about 6% was invested in financial instruments; all bank deposits with little liquidity. And the real estate was absolutely illiquid, especially if he were to need the money at short notice, like a month. “They were brick rich but cash flow poor," said Girilal, co-founder and executive director, Mitraz Financial Services.
Although Balasubramaniam doesn’t have any plans of an early retirement, he takes a keen interest in wife Nithya’s ventures and says that he is “intellectually invested" in them. “I want my investments to generate an income for us. The venture, simultaneously, should generate cash flows so that we can scale it up and take it to other cities, open centres, and so on," he said. Girilal and D’Cruz said that would be difficult with the set of investments—mainly real estate—that they came in with.
Mitraz adheres to some broad guidelines. An individual is recommended to have at least 60% of her assets in financial assets to ensure adequate liquidity and cash flow. Balasubramaniam, on the other hand, had just 6.8%. More than 35% of our inflows (such as salaries and business income) should be channelized to savings. In Balasubramaniam’s case, this was just 22%. Girilal said that after listing out his real estate investments, they helped him prioritise the first set of assets to sell, based on taxation, returns and purpose.
“For instance, we advised him to sell the 3-BHK flat as they were not clear whether they’d like to settle in Bengaluru later in their lives. And the kids would, most probably, move abroad; so why block the money now and that too in such a big house?" said Girilal.
Balasubramaniam has two sons, aged 11 and 9. The kids were a sort of training ground for him and Nithya before she started her venture called Brain Gym, about 6 months ago. The couple uses international teaching material for the children who attend their tuitions; the first batch is underway these days.
“We used the material on our kids to gauge their interest levels and abilities and now use the same for other kids," says Balasubramaniam, who adds that the course teaches kids (he says the ideal time for them to learn to think is 0 to 15 years of age) verbal, non-verbal, analytical, creative and lateral thinking. Interpreting patterns and solving jigsaw puzzles are few of the exercises that kids in his class spend time learning and honing.
Like many salaried individuals, Balasubramaniam had just his company’s health insurance cover (Rs3 lakh). Mitraz bumped it up to Rs15 lakh through a family floater policy. Selling real estate also helped him close a housing loan and that helped him invest more of his salaried income in a mix of equity and debt funds that Mitraz had carefully chosen for the couple. At present, his financial savings have climbed up to 35% of his total assets. Mitraz also made Balasubramaniam sell his term insurance policies, which he had bought through an agent, and instead buy a new one online of Rs1 crore—thereby saving him agent commissions.
Today, the couple has a portfolio that is more liquid and which has enabled Balasubramaniam to take the first steps in supporting Nithya in her entrepreneurial goals. “The purpose of financial planning should be to help a family discover what they would like to achieve and how to get there," said Girilal.
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MY PLAN
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Name: Vijay Balasubramaniam
Age: 41
Profession: software professional
Name: Nithya Vijay
Age: 37
Profession: teacher
Financial planner: Varun Girilal and Binoy D’Cruz, Mitraz Financial Services Ltd
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