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Mere dependence on traditional forms of investment, be it in life insurance policies or bank deposits, may not always help you meet your financial objectives. It can sometimes even derail your goals.

Hemant Shamrao More (45), a resident of Thane, Mumbai, found this out the hard way after investing a considerable amount of money for a long time. He realized later that all his savings would not allow him to retire at the age of 55 years like he wanted to. The reason, he admitted, was the lack of a focussed approach to investing.

More, who works as an assistant operations manager in the oil industry, talked to Mint about how his life changed after seeking professional help.

“I invested in some mutual funds (MF), and took too many life insurance policies. I did not give it much thought and there was no future planning," said More, who is a non-resident Indian (NRI) for taxation purposes because of his work profile—he spends almost eight months every year in Dubai, UAE.

Back home, he has a family of three—wife Vandana Hemant More (39 years old), their 17-year-old son and 13-year-old daughter.

The realization that his investments were not sufficient for a rainy day took him to Harshad Chetanwala, a Sebi-registered investment adviser and co-founder of MyWealthGrowth in 2020.

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“When we started interacting, we found that all his investments had gone haywire. More had nine life insurance policies. While the money invested was reasonable, it was all scattered. Also, the mutual fund portfolio at that time was highly skewed toward small-caps," said Chetanwala.

“The problem was that most of the money was going into bank deposits and traditional life insurance policies," the expert added.

In the initial stage, More’s overall asset allocation was skewed towards real estate. His portfolio included investments of around 6% in equities, 68% in real estate, 16% in debt and around 10% in bank deposits.

The family owns a real estate property in Mumbai which provides rental income. The dividend yield is nominal, but the property is debt free and this has helped improve the yield.

More had also parked some amount in the beleaguered Punjab and Maharashtra Co-operative (PMC) Bank, most of which is still stuck.

According to Chetanwala, the family had the potential of investing 60% of their monthly salary. But the majority of the money went to bank deposits and for servicing insurance policies.

Chetanwala said that having such a low level of equity in a portfolio dented More’s long-term plans. “He is intending to retire by 55 years, but we are targeting 58-60 right now," he said. To achieve this, the long-term plan is to take equity allocation to 65-70% of the overall portfolio.

More’s financial objectives are very simple: education of the children and their marriages, besides saving for retirement.

Chetanwala said, “As most of their goals are long term, we have been using equities for that. The debt allocation has been taken care by the insurance policies. As most policies are maturing at the stage where they are retiring, that will take care of some parts of their retirement corpus. Plus, a couple of policies are associated with their children’s education and marriage," he said.

More now has a new portfolio—23% in equity, 60% in real estate, 13% in debt and 4% in banks. He is also keeping some amount in liquid funds, for contingency purposes.

His MF portfolio now is made up of around 70% giant and large-caps, 22% mid-cap, and 8% small-cap. Within the large and giant-cap, there’s a 5% allocation to international equities.

Any refund from PMC Bank, asand when he gets it, will be channelled into equity funds.

“There was some discomfort with equity exposure due to market volatility in 2020, uncertainty about the PMC Bank money and the lack of liquidity. That’s why we took it slow. I think equity adoption could have been faster but, as an advisor, I have to understand the client’s comfort level," Chetanwala said.

More says he feels more relaxed about his life now after putting a financial plan in place but admits that he should have started much earlier.

Even Chetanwala suggests that individuals should start their financial planning early and have a much greater allocation to equity in their portfolios.

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