It’s important to invest in financial products that are suitable for your goals

Ashutosh Tiwari, 39, a supply chain and logistics professional from Pune, was clear that he needed to take care of his other financial responsibilities before he worked towards the goal close to his heart—financial freedom by the time he is 45 years old. He took up a job opportunity in the Middle East as a good way to further both his career and financial prospects. In this, he was fully supported by his wife Nidhi Mishra, 37, a PhD in psychology, who chose to stay back to continue her career in academics and social entrepreneurship and to minimize changes to their family with two children.

The family has seen the benefits that working to a plan brings to one’s financial situation, though it was not always this well-ordered. Like all young people in the early stages of earning their income, Tiwari made the mistake of buying stocks on tips, irrelevant insurance products from relatives and friends and committed large sums of money in real estate. A shift in perspective came with post-graduate education and an interest in knowing more about the fundamentals of investments that led him to the realization that he needed to make changes in his portfolio to be able to get to their goals.

The six-year period in Qatar helped them pay off their loans, which were putting pressure on their finances. It set them on their long-term financial goals of retirement and the children’s education and marriage, apart from creating an emergency fund. Tiwari used his understanding of defining goals to set ballpark figures for them and started saving. As their investible surplus grew, they decided to consult a financial adviser. Their search led them to Melvin Joseph, a Sebi-registered investment adviser and founder, Finvin Financial Planners.

“Ashutosh’s intent to do better with his finances was clear from the start. He was made to correct the common errors that most people make,” said Joseph. The first task was an exhaustive financial audit where Tiwari had to compile data on all investments, liabilities, savings and cash and insurance available.

Once this was done, Joseph helped identify the weak links in Tiwari’s financial situation. This included the real estate-heavy nature of the portfolio, inadequate long-term investments and insurance cover. The team then set to bring the portfolio on track by defining the goals and the corpus required and aligning the portfolio to it. “There were some tough discussions, especially around the retirement corpus. But it helped us understand the enormity of the task at hand,” said Tiwari.

The next step was to invest the money held in deposits in equity funds to take care of their long-term goals and allocate to an emergency corpus that was built keeping in mind Tiwari’s plans to return from Qatar and explore startup options in the logistics field. The retirement goal too was partially funded and once Tiwari is clear about his future income, it will get additional funding. Joseph also made sure that the family got adequate life and health insurance and that they exited from the unit-linked insurance plans that did not add value to their financial security.

Now that their important financial goals have been taken care of, Tiwari has the confidence to go after his cherished dream of having a logistics startup. The emergency fund is adequate to take care of the needs of the household in the meantime.

Joseph’s insistence on correcting the real estate allocation in the portfolio and an asset allocation that focused on long-term goals has had a positive impact on the portfolio in these times of turmoil too. Tiwari saw an opportunity to invest in the equity market as it came to grips with the impact of the covid-19 crisis. He has begun deploying the funds from a lucky deal closure on a real estate property into the targeted equity funds. The distinct possibility that markets will continue to go through volatile times does not worry him since the investments have been made with a clear view of the goals that are well into the future and an asset allocation into equity, debt and cash that reflects this.

The family has experienced the benefits of unbiased expertise in managing their own finances and now want to educate others about it. Tiwari is active on social media in helping people understand the advantages of financial planning, asset allocation and the importance of being discerning in selecting products to build portfolios in line with goals.