Home / Money / Personal-finance /  ‘We invested only in savings schemes without evaluating personal goals’

When you’re a young couple, you want to travel the world, support your parents, and make more money while you enjoy a comfortable lifestyle. Amidst all this, you usually tend to compromise on your investments and savings. Ashutosh Shukla, 30, and Ankita Bajpai, 31, were college friends for a long time before they got married in 2015. Their mantra before consulting a financial planner was to save money only to avail tax benefits.

“We started working with our financial planner after a year of our marriage when we realized earning money and then saving just for tax benefits was not a good idea," said Shukla. The Bengaluru-based couple realised they had short-term and long-term goals which could be met only with systematic financial planning. As a couple, they want to pursue a master’s degree in management, create sufficient medical corpus for their parents and also travel the world.

“The short-term goals so far were all achieved through building mutual fund portfolio. Some of their short term-goals were eliminated from the list which reiterates that reviewing one’s plans is important," said Varun Krishna, certified financial planner, International Money Matters.

Baby steps

Soon after marriage, Shukla and Bajpai started planning for the changes that were about to unfold in their lives. While they wanted to plan for their parents, they also had individual goals. “We were both far from understanding the concept of investing. After realising we had no expertise, we decided to take some guidance," said Bajpai. A friend advised them to consult a financial planner to help manage their money.

“Like many others, their (Shukla and Bajpai’s) understanding of investments was correlated only to returns. But they had some short-term goals; so I had to help them understand risk versus reward," said Krishna. In the initial days, Krishna helped the couple underplay equity investments and concentrate on creating an emergency corpus and invest in the necessary insurance policies. After having the two in place, the couple was evaluated for their risk appetite. Their financial planner had to emphasize on the potential returns they could generate with their risk profile and goals. He also had to brief them about the kind of losses they could incur as the couple was new to investing.

Before working with a planner, the couple had a stable portfolio, with investments in fixed deposits and employees’ provident fund (EPF) only, which didn’t help them grow their investment to the maximum. Their expenses were not in check which made them splurge occasionally and their goals did not include planning for retirement and childcare.

The outcome of the financial planning helped them understand how much could be invested and in which tool. Initially, the couple found it difficult to save large chunks as they were used to spending money lavishly. The planner concentrated on creating a debt portfolio for all the short-term goals. “Now that all the short-term goals are met, I am slowly helping them increase their equity allocation," said Krishna.

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Lessons learnt

The couple understood that traditional ways of managing money does not work in today’s time because the current generation’s expectations from life are very different from the previous generation.

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“Everyone is running fast and our aspirations have far less time frame than those of our parents. I may want to buy a house and a car at the same time; so the traditional finance management methods wouldn’t work," said Shukla. Bajpai said she is glad that they consulted a financial planner as it has helped the couple avoid any major financial turmoil and now they are able to save about 40% of their salary every month.

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