Home / Money / Personal Finance /  Navigating through the changing money goals of a merchant navy captain

Lovish Sahni has had an admirable career: The 33-year-old has been with the merchant navy since he passed out of school and rose through the ranks to become a captain this year. Yet, it was the long years spent away from his family that made him realize that he needed a financial advisor. In 2016, when he finally decided to associate with one, the idea was to have an emergency contact whom his family could reach out to for financial details when he is not around. “I realized that there has to be someone whom I can trust to take care of my finances and also keep in touch with my family in case of any emergency," said Sahni.

Gradually, he also decided to seek advice on building wealth to meet his various financial goals. Over the years, his plans kept changing, and so his financial plan also had to adapt to these changing needs. “My financial goals are a bit dynamic. I am not sure if it happens with other people as well. I am a bit restless on that front as I change my mind every six months looking at the situation around me," added Sahni.

Mint spoke to Sahni and his financial advisor - Anupama Aggarwal, senior vice president - advisory at International Money Matters Private Ltd, to understand his personal finance journey. In particular, we look at how Sahni’s financial plan to fund his higher education plans changed over time.


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Education goal

Sahni, for many years, dreamt of pursuing higher education to upskill himself . In 2016, he decided to start building a corpus to fund his education: it would cost him 50 lakh for two years. Considering that there would be no income during the two-year period when he planned to take a sabbatical and also meet expenses relating to living costs, course fees and family support, Aggarwal estimated that 40% of the education cost had to be funded through a loan, and Sahni agreed to this.

Since the investment horizon to build the corpus for this goal was short-term (just two years), Aggarwal suggested parking the funds in liquid assets (such as FDs) with almost nil exposure to equity so as to mitigate the risks of market volatility.

While everything went as per plan, in 2018, Sahni realized that he was not comfortable taking a loan. He decided to opt for self-financing and postpone his studies by about 3-4 years. After discussions with Aggarwal, he revisited the education costs and reduced allocation/investments towards other financial goals such as property purchase and expenses for his marriage.

Aggarwal suggested that Sahni shift some part of his corpus to equity. His overall equity exposure was increased to 40% over the next two years from about 20-30% in 2016.

In 2020, Sahni put anend to his education plan when he decided to stay with his family. “I was away from my family for the last 15-16 years; getting a degree was an ambition that would come at the cost ofbeing away from home again for another 10-12 years. So, I decided to drop that plan. Now the corpus accumulated for that is being shifted to meet my other financial goals such as capital needed to set up a business in Delhi and maybe acquire assets in the future," he added.

Room for error

The key takeaway from Sahni’s personal finance journey is – that segregating the portfolio for each financial goal provides enough flexibility in managing the finances. It will help in deciding the right asset allocation and investment product based on the risk appetite and investment horizon for each goal. But note that even good financial planning may not always generate the desired results due to market conditions or errors in human judgment.

For example, Aggarwal said that they missed investment opportunities in equity in 2020. “While we kept adequate liquidity in 2020 for Sahni’s goals, we missed the opportunity in the equity markets for most of the year." She said that they could also have reduced the tax implication on one of the investments in consideration of his NRI status with no income in India. However, Sahni said “I appreciate the flexibility in the financial plan more than the returns generated on my investments." he added.

The other point to note from his financial journey is to set aside enough money for emergency and medical needs before making any investments.

Based on Aggarwal’s suggestion, Sahni maintains an emergency fund of about six months of his monthly expenses. In addition to the health cover provided by his company, he has a personal health insurance cover for 3 lakh, taken in 2016, and a life insurance cover of 1 crore. Talking about his finances post his marriage, he said “I am blessed with a life partner who is more capable than I am to take care of herself and the family as well."

Satya Sontanam
Satya Sontanam is a senior content creator at Mint with a keen interest on data crunching, analysis and the story behind trends. She writes on personal finance including investments, regulations and data stories. Before joining Mint in December 2021, Satya worked as research analyst and also a personal finance writer at The Hindu BusinessLine. Satya is a qualified chartered accountant. In her free time, she enjoys doing yoga and listening to podcasts.
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