How choosing a registered investment adviser helped this family manage finances

Choosing the right financial adviser is pivotal in managing one's finances effectively.
Choosing the right financial adviser is pivotal in managing one's finances effectively.


  • Balpreet Singh's family opted for structured financial planning under the guidance of a fee-only registered investment adviser

A well thought-out financial plan plays an important role in achieving your life goals, be it buying a house, saving for your child's education, or even planning for retirement. It is easier planning for such financial goals, one at a time. For instance, by planning your vacation in advance and saving up for it rather than taking a loan, you can enjoy your trip stress-free and avoid the financial strain of loan repayments. But how does one plan for multiple financial goals at the same time? That is where a financial adviser comes in.

Choosing the right financial adviser is pivotal in managing one's finances effectively. And Mumbai resident Balpreet Singh decided early on that he would need the help of an adviser. He then sought the services of Abhishek Kumar, a fee-only Sebi registered investment adviser (RIA) based in Bangalore. Kumar analyses Singh risk appetite and tailored a personalized portfolio with the right asset mix to meet multiple financial goals at different points in time.

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Singh's financial planning journey was spurred by the realization of the need for a retirement corpus, alongside funds required to meet various financial goals. “Most of us got to know a little about financial planning from our parents or elders. Almost 18-20 years back, there wasn’t too much know-how on personal finance. I kept doing things in bits and pieces. There was no structured planning of my finances," says Singh.

Later on, Singh found that his traditional approach to financial planning was no longer sufficient and also realized the need for personalized guidance. “I had bought some insurance money back plans and unit linked insurance plans but there was no systematic investments. I felt the need to plan my finances better and decided that I should have a trusted adviser who could help me pursue my financial goals. I connected with Abhishek Kumar in early 2019 and we started planning things out in early 2020," says Singh.

Meanwhile, his wife Chanchal Kaur took a major decision to step back from her academic career to devote time for their daughter's crucial educational years, leaving Singh as the primary earner. This shift naturally led to a decrease in the family's income, necessitating a reevaluation of their financial strategy. Kumar's guidance was instrumental in creating a financial plan that addressed this income gap, ensuring that their financial goals remained on track despite the change in circumstances.

Portfolio rejig

On Kumar's advice, Singh restructured his investment portfolio significantly. Previously, his investments were skewed towards traditional insurance plans and ULIPs, with only a small portion devoted to mutual funds (MFs). He now follows a more balanced approach, with nearly 50% of his portfolio allocated to equity MFs and the remaining 50% invested in debt instruments such as public provident fund, employee provident fund and the National Pension Scheme. This shift not only diversified his investments but also aligned them with his long-term financial goals.

Singh shares that he has reduced the number of funds in his portfolio, avoids investing in new funds and focuses on just a few funds for his financial goals, “Based on our risk appetite, we are investing in a mix of Nifty50 Index and flexi cap funds for our equity allocation. Earlier, we were investing in multiple equity MFs and were finding it difficult to manage multiple funds on our own. We are in better control of our equity allocation now," Singh says.

(Graphic: Mint)
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(Graphic: Mint)

Goals and timeline

Singh's financial goals include ensuring a comfortable post-retirement life in the next 20 years, providing for his daughter's education, purchasing a bigger home without impacting his retirement corpus, and taking a family trip abroad. He also aims to maintain his current lifestyle post-retirement. Kumar has charted out a specific timeline for each financial goal to achieve these objectives. “We have planned our retirement taking into consideration my current monthly fixed expenses and the future value of our investments,"says Singh.

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He has also set aside funds for his daughter Reet Kaur's education. “For our daughter's graduation and post-graduation as life milestones, we had budgeted Rs15 lakh and Rs30 lakh, respectively, based on the current level of expenses for college. She would start her undergrad college from 2026 and, based on Kumar's suggestion, we are reallocating the money required for this goal from our equity portfolio to debt portfolio to protect this corpus for her graduation." His daughter wishes to travel abroad after her 10th board exams. Singh plans to fund this trip by pre-planning a corpus instead of taking a loan.

Singh also aims to purchase a larger home and a new car without compromising his retirement savings. His strategy involves selling his current property, along with additional required funds for which has been investing, to acquire a new one. This approach ensures that his retirement savings remain untouched while he upgrades his living space. “We would like to buy a bigger house and change our car. These have been planned in a way that it should not be impacting our retirement goals and our daughter's education expenses" says Singh.

Uncertain risks

When he started his career, Singh relied solely on his employer's health cover. The covid pandemic made him opt for a larger cover and reduce the dependency on his employer. “We bought a family floater base policy of Rs15 lakh and a super top-up policy of Rs20 lakh. We bought both policies based on Abhishek’s advice. Before that, we were entirely dependent on the cover provided by our employers. Currently, we have a family floater cover of Rs10 lakh, provided by my employer. We are paying an annual premium of Rs27,000 and Rs5,000 for personal base and super top-up policy," says Singh.

Singh has opted for a term plan covering 10 times his annual post-tax income, and aims to increase this cover to meet rising lifestyle expenses and inflation so as to protect his family's major financial obligations in case of his untimely demise. “We have a term plan cover which is 10 times our annual post-tax income and could cover their major financial goals in case of loss of life of the primary earning member of the family," says Singh. He also has an additional personal accident insurance policy, with a coverage of Rs50 lakh.

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For any unforeseen challenges, Singh's family has an emergency corpus for six months, which they plan to increase over a period of time, as advised by Kumar.

Earlier, Singh used to channel a large part of his monthly income into premiums of traditional insurance policies, which did not align with his expected returns, risk appetite and financial goals. “We are currently putting 60% of our monthly income in systematic investment plans (SIPs). After buying adequate term plan cover, we paid up those policies and routed the amount saved on premium to monthly SIPs, investing in a mix of equity and debt funds. Of late, it's only SIPs in equity and flexi cap funds as per our future goals," says Singh.

Kumar has also asked Singh to close his ongoing 10-year home loan as early as possible. “We have an ongoing home loan and the outstanding is currently 25% of the original amount. We are planning to pay it off within 3 to 4 years using the annual bonus," he adds.



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