Photo by Hemant Mishra/Mint
Photo by Hemant Mishra/Mint

‘We want to inculcate financial discipline in our children’

Getting the investments right was not the only takeaway from professional advice

Harish Vaidyanathan believes that investments should begin as soon as one starts earning. While he may have got that part right, he faltered on where to invest. “I bought unit-linked insurance plan (Ulips), but soon realised my mistake as front-end costs left very little for investment," said Harish. “Except term insurance, I had all kinds of savings insurance plans. I had about seven, and they didn’t meet my investment needs," he added. On the recommendations of an ex-colleague, he also invested in mutual funds. But he really began a well thought out financial plan 10 years ago, when he met Priya Sunder and Shyam Sunder. 

He met them at a financial literacy workshop conducted by his ex-employer and realised that he had a lot to learn. “I had to spell out my expenses and that proved to be an eye opener. I had a very fuzzy idea about my expenses as I’d never looked at them carefully," said Harish.

“I was spending about 80% of my money. More importantly I also learnt the surplus I had was just lying in the bank, when I could have invested it wisely," he added. For Harish, this was a wake-up call and according to him he was already late. 

Getting the investments right was not the only takeaway from professional advice. Harish and his wife Sushila Narayanan were also able to strike a balance between their spends and savings. “One becomes aware of the financial goals and is able to estimate the cost of those goals. It helps consulting a professional as you also become aware of your mistakes and don’t repeat them," said Sushila. They have two daughters, Trsha (13) and Mihira (9). 

Harish says, keeping tabs on expenses and striking a balance is important. “As your income increases, you should have more surplus, but expenses end up increasing at a faster rate without proper planning. Therefore, it’s important to be aware of and control the expenses so that you have more to invest," Harish said. 

For Harish, the asset allocation is 80% in equities and 20% in debt. “My equity portfolio consists of stock options from my company, pure equity and balanced mutual funds," he said. In 2004 Harish took a loan to buy a house, which he repaid ahead of schedule recently, as he is thinking of buying another one. He now has term insurance and health insurance covers for his family. “I lapsed some of my insurance policies, some have matured and some are near maturity so I am keeping them," he said.

As for his financial goals, they keep changing and his planners work on them accordingly. “Apart from fixed long-term goals of retirement and kids’ education, our financial goals keep changing. For instance, right now I am working for a start-up so an emergency corpus is a must. We review our goals and then work on a financial plan accordingly," he added. 

“Whenever kids get money in the form of gifts, we invest it for them. At first the kids, just like me, were not very comfortable with the idea of entrusting a third party with our money. But now they are very happy and they have met our planners as well," said Suhila. “They are beginning to understand the concepts of investment and return. They ask Harish how their investments are doing and get very happy when he tells them the return on their investments," she added. Slowly but gradually the couple wants to cultivate financial discipline in their kids as well. 

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