‘Our finances became more structured after we got a plan’

Just earning a good salary is not enough for wealth creation. Absence of a financial plan that channelises our money towards reaching our financial goals—or worse, absence of financial goals —can backfire some time. That’s what Mumbai-based couple Dhananjay (45) and Preeti (41) Suryavanshi realised last year.

Dhananjay has a stable job at a leading power utilities company and Preeti holds a senior position at one of India’s largest conglomerates. Their finances were in a state of disarray before they met their planner. In simple words, they had the money, but it was lying idle. The money wasn’t multiplying, as it should have. A major chunk of their income used to go into fixed deposits (FDs) and real estate. Apart from the house in which they live, the couple has invested in two residential apartments and a vacant plot in Pune.

In 2017, the couple went to Steven Fernandes, a Securities and Exchange Board of India (Sebi)-registered financial advisor. “I wasn’t doing much with my money. Before my marriage, I used to invest in some equity shares, but over time I lost confidence in them because markets had fallen. As a result, I also couldn’t invest in equity mutual fund schemes,” said Dhananjay.

Fernandes noticed many gaps in the couple’s portfolio. “All the money was lying in FDs though they had long-term goals,” said Fernandes. The moment the couple’s bank account balance crossed Rs2 lakh, the excess money was put in a bank FD. The couple was just saving money in their bank accounts and through FDs, without any specific purpose, said Fernandes.

Dhananjay agreed. He cited the example of withdrawing money randomly from their bank accounts for holidays, and not having a dedicated fund working towards building a holiday corpus. The Suryavanshis like to travel; sometimes within the country but once in a while, internationally. After the couple met Fernandes, financing for holidays—as well as other goals—became structured.

Before starting to structure Suryavanshis’ finances, Fernandes took stock of their insurance cover. He realised the couple had good health insurance policies from their employers. While Dhananjay was insured for a sum of Rs10 lakh, Preeti had a cover of about Rs3 lakh. But they didn’t have any accident or life insurance policy. Fernandes has put Dhananjay on an accident policy of Rs50 lakh and Preeti on a cover for Rs25 lakh.

Since both their daughters are still young (Shreya, 12 and Saesha, 7), Fernandes recommended a life cover for the couple. A term plan of Rs1.25 crore was bought for Dhananjay and Rs1 crore for Preeti.

Then came the realisation that they need to save for their children’s higher education and marriage. For this, Fernandes brought the couple back into equity and debt markets, this time through systematic investment plans (SIPs) in mutual funds. Today, nearly 30% of their income goes in SIPs. “I thought that after investing so much of money in SIPs, I wouldn’t have enough money left to spend. But we are quite comfortable,” said Dhananjay. In fact, his “unnecessary spending has gone down too”.

But what about their retirement? Fernandes said apart from the sizeable Employees’ Provident Fund (EPF) corpus, the two residential properties, other than the one where they live currently, will contribute a chunk towards their retirement kitty when they get down to sell in future. “But incremental SIPs made every year (a 10% top-up every year is the target), will also go towards the couple’s retirement,” he added.

The Suryavanshis are looking forward to their next holiday, and this time, they have a separate basket to fund it.

MY PLAN

Name: Dhananjay Suryavanshi (45)

Name: Preeti Suryavanshi (41)

City: Mumbai

Financial Planner: Steven Fernandes, CEO, Proficient Financial Planners

Asset allocation after financial plan

Equity: 40%

Debt: 30%

Real Estate: 30%

Mistakes I won’t repeat

1: Won’t keep money in fixed deposits only

2: Will always keep an allocated amount for emergency needs

3: I now believe there is no such thing as short-term gain; you need to invest for your planned goals

4: Get yourself a financial planner; you are not an expert in every field

5: Plan for even short-term spending, no overnight spending for expensive articles, car, etc.