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There is a difference between saving and investing, which Naren Peri and Lalitha Uppaluri understood. “Savings were always on my mind, but not investments," said Naren. “I used to think I am smart, but then I put my ego aside," he said. “We tend to think we are right but an expert has experience with many different types of portfolios," said Lalitha.

Earlier their investments were further hindered when the family moved abroad. “Our investments were constrained and we could not continue as we left for the US, twice," he added. When they returned in 2014, there was a corpus that the couple wanted to invest. “We wanted a professional and methodical approach." A colleague told Naren about a personal finance group on Facebook. The couple approached a few advisers, and finally settled on one.

“We wanted a fee-only adviser. Plus, even before we started, he (Piyush Khatri, the financial planner) gave us a non-disclosure agreement. I also work in services, and we sign such agreements," said Naren.

The next step was putting the money pieces in the right place. At that point, their portfolio suffered from a problem of plenty of sorts: high expenses, too much life insurance and too many mutual fund schemes. “I didn’t have ‘too many’ policies but the total life insurance amount was too high," said Naren. Once all details of expenses were collated, the result showed that for their current income level, the Bangalore-based couple’s expenses were too high. “I had some difficulty believing that but the truth is the truth," said Naren. The couple also had a large number of mutual fund schemes, “about 30."

One of the reasons for this over-exposure was that while Naren and Lalitha were diligently building a corpus, the process was not goal-based. “I thought that whenever I would need money, I could take from this corpus," he said. Their planner explained how asset allocation should work and that investments must also be based on investors’ risk appetite and the targets. Simply building a large corpus may not serve the purpose.

From a point where all their investments were bunched up, Naren and Lalitha are now slowly getting out of mutual funds that are underperforming or not needed. “We realised that so many funds were not needed. We are slowly moving out of some," said Lalitha. All investments are now allocated based on short-, mid- and long-term targets.

Many other details such as having a Will, were also sorted out. “This (having a Will) was something we had not thought of," said Lalitha. Once the numbers were in place, the couple realised that if they wanted to, they could retire sooner than planned—Naren at 52 and Lalitha at 50. “Not that we will retire then, but we know that we can," she said.

Children’s education was always an important goal, but detailed planning for future expenses was missing. Their daughter Neha is 11 years old and son Krish is 5 years old.

One factor that remained unchanged in their portfolio was low allocation to real estate. Both Lalitha and Naren were averse to investing in it. “In the US, there is a correlation between real estate yield and EMIs. In India, even if one buys a house and rents it out, the yield is so low," said Naren. The family lives in a rented house and prefers it that way. “We are not buying a house for the next 5 years," added Lalitha. “I keep telling friends that you get rent that’s barely 4%. Even a fixed deposit gives more. People keep telling us we should buy (a house), but we don’t want to," she added.

In general, both prefer to stay away from debt. “We bought our car some 3 years back, with cash; no loan," Lalitha said.

Having a financial plan has helped the couple bring in more discipline in not only their own money lives but also of their children. “We track our expenses. Details are put in a diary and there are card-based expenses," said Naren. According to Lalitha, the children now understand that things run according to a budget. “Whenever we go out, our son always wants to buy a toy. We try to tell him that there’s no ‘budget’," she said on a lighter note. The exercise of a financial plan has made the couple feel more stable and secure. “It’s very peaceful—we have a plan; we have insurance; there’s no debt…," said Lalitha. Naren echoed the sentiment and added: “I am excited. I am looking forward to financial freedom."

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MY PLAN

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Name: Naren Peri

Age: 40

Profession: Analytics team leader with an IT company

Name: Lalitha Uppaluri

Age: 38

Profession: Data analyst with a financial services company

Financial planner: Piyush Khatri, founder, Sahastha Financial Consultants

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