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Rahul Hingmire’s case was a classic example of all eggs in one basket. It ticked every checkbox in the list of don’ts for investors— 100% investments in a single asset class, a non-existent emergency fund, inadequate insurance and zero diversification. What Hingmire had was an extremely high-risk investment strategy with a non-existent plan B. In financial terms, a “recipe for disaster".

Investing all your hard-earned money in a single asset class that is highly illiquid is one giant risk, but investing in it without a financial goal or plan is irredeemable.

Hingmire is a lawyer and a founder member of a leading law firm in India, and his wife Supriya is founder and managing director of a recruitment services firm assisting corporates pan India. Their hectic schedule and undeterred focus on growing their businesses had side-tracked their investment journey.

Investments: Although Rahul and Supriya were excelling professionally, their personal finances suffered due to lack of attention. Rahul and Supriya did park aside their investible surplus as often as they could. Still, the paucity of time and the lack of knowledge or awareness about financial assets led them to invest in the only asset they truly understood, real estate.

Nevertheless, Rahul and Supriya soon realized their failings in managing their investments prudently and decided to reach out to a financial expert for help. They began their search for a fiduciary who could be trusted to handle their assets while keeping their best interests in mind. They met financial expert Tarun Birani, founder and director of TBNG Capital Advisors Pvt. Ltd.

Birani is a fee-based Sebi-registered investment adviser. He took the time to discuss and understand their financial journey, money habits and investment mantras. The priority was to do a thorough financial risk assessment and better calculate their capacity to absorb risks. Trusting Birani’s guidance, the couple shared their complete financial information, allowing Birani to conduct a comprehensive financial assessment.

The findings astounded the couple. They hadn’t grasped the risks involved in a single asset investment route. This awareness led them to the realization and need for a contingency fund and relevant insurances. The assessment highlighted the positives: they still had a good time horizon to make up for the time lost in letting their savings compound.

Birani said, “The Hingmires kept their lifestyle expenses low and were a family of no dependents with immense potential to save. All that they needed now was a strategic financial plan to set them on the right investing track."

“Rahul and Supriya were extremely open and transparent about their present financial journey and their life plans for the future, which was a silver lining. This openness gave me proper insight to better understand their precise goals and draft a blueprint to plan the way to every single financial milestone," Birani added.

Emergency fund: As a thumb rule, having a contingency fund is a top priority. The planner explained to the couple that they had to ensure they had adequate liquid savings to fall back on to get their contingency fund in place. A sum equivalent to six months of essential expenses was parked in funds that could easily be liquidated within a 24-hour period.

Insurance planning: Next up was to ensure they are adequately insured. Through the human life value calculator, the planner calculated an adequate term cover along with a complete health check-up to rule out any underlying illnesses. This way, the couple analysed the proper term and health plan that suited their unique requirements.

Asset allocation: Birani next helped them focus on investing for the foreseeable future. The planner assisted them in building a robust portfolio of financial assets aligned with their risk appetite. The corpus that accumulates through these investments is aligned with the short- and long-term goals and retirement needs.

Today, their asset allocation has moved from 100% in real estate assets to 60% in real estate and 40% in financial assets (30% in equity and 10% in debt specifically). They have also invested in some global assets that offer their portfolio the necessary diversification.

The Hingmires trusted Birani’s financial advice and are now prudent investors. Based on their financial plan, they are well on their path to financial freedom in the next few years. The route to financial independence does not need to be one of immense struggles or sacrifices. It begins with simple awareness and understanding of what you own and how you can best put it to use.

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