When Dr Vishaal Bhat, an associate professor at Manipal Melaka Medical College, Manipal (Karnataka), first realized the importance of investing and saving in a planned manner, he started off by taking the DIY route. But DIY in investing is not as easy as it sounds. To make it work, you not only need adequate knowledge but also ample time on your hands.

“Through WhatsApp and Facebook groups, I tried to do a piecemeal job of getting our finances in order. But due to the nature of my job, I couldn’t dedicate enough time," said Vishaal. He was not able to tackle issues that are essential for a robust financial plan. “It was only later that I realized that I had not been investing enough and that I need to calculate every life goal keeping inflation in mind, and not go for quick fixes," said the 40-year-old.

What Vishaal did manage as a DIY investor was dabbling in direct stocks and mutual funds, but made some common mistakes like taking a bull run in markets for granted and buying too many funds. “I had some amount invested in small-cap stocks that were doing well and I thought nothing would go wrong," he said. Luckily, he got out in time with some profit. Once he learnt that direct plans of mutual funds were better, Vishaal started investing randomly, taking suggestions from online forums and friends. “With online access, the number of funds I was invested in exploded but it did not have any rationale. The same was the case with my stock investment (the early success did not help either)," he said. Vishaal also dabbled in market trading but quickly realized that he did not have the time nor the emotional detachment to do well.

He soon acknowledged that he needed help to bring some discipline to his finances, and met Chandan Singh Padiyar, a Sebi-registered investment adviser.

Until he got into a financial plan, Vishaal did not fully understand the need for financial goals and how different products are suitable for different needs. “When Vishaal first connected, the main issue was that whatever savings he had done was either in direct stocks, equity mutual funds or long-term fixed-income instruments such as Employees’ Provident Fund (EPF), Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY). Due to home and personal loan EMIs, the surplus available for investments was very nominal," said Padiyar.

The first thing Padiyar asked the family to do was creating an emergency corpus. The emergency funds are parked in a savings bank account with flexi-sweep facility and a low-duration fund.

“Emergency fund and insurance are the most important pillars of financial planning. If they are not given priority, a plan may not work to an investor’s advantage," said Padiyar.

The adviser helped Vishaal and his dentist wife Dr Swathi Pai, 34, a reader at Manipal College of Dental Sciences, Manipal, thrash out their goals. For the retirement goal, they invest in hybrid mutual funds, National Pension System (NPS), EPF and PPF. Like most parents, the couple also wanted to save for the education and marriage of their two daughters—eight-year-old Vriddhi and five-year-old Veda. For the two goals, they invest in a combination of index and equity funds, and SSY. They also firmed up short-term goals such as taking a break from work every year for which they invest in recurring deposits.

During his DIY phase, Vishaal read about the need for adequate life and health insurance. He surrendered the child insurance policies he had taken through agents then. After meeting Padiyar, both Vishaal and Swathi bought term plans. In addition to the health plan provided by his employer, the couple has taken individual policies, apart from a floater plan that covers Swathi and the children. Padiyar also recommended a personal accident policy for the couple.

Initially, the couple thought they were saving enough, said Padiyar. As they progressed in the plan, they cut down unnecessary expenses and increased their savings. “Financial planning has actually given us more freedom with our daily budget. We now understand what are our actual requirements and what is an unnecessary expense," said Vishaal. Besides, they no longer worry about emergencies upsetting their budgets and lives.

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