An SIP-Based Plan For Lasting Financial Security

Prashant Bhaskar and his wife Ashwini live in Australia. Prashant is a reputed angel investor and offers companies human resource (HR) solutions. Ashwini heads the marketing division of an e-commerce firm in Melbourne. The couple has two kids, aged 19 and 12.

Before shifting to Australia, they worked in leadership roles in the telecom and internet sector in India. Both have been long-term investors and knew early on the importance of investments for their financial security.

However, the Bhaskar family had been investing independently in various avenues as they deemed fit. The couple felt they were on the right track as they were investing regularly. But despite being long-term investors, Prashant and Ashwini did not think about a dedicated financial plan.

Prashant always felt that something was missing from his overall investment. Though he did not know what exactly it was, he had a fast-developing sense that he needed to fill some gap. “I always believed in the power of compounding and the merit of starting investment early and regularly. But, somehow, the execution of the investment-related knowledge was missing,” he admits.

His situation was an indication that he needed some professional investment help. About eight years ago, Prashant met Nirav Panchmatia, a mutual fund distributor and founder chief executive officer (CEO) of AUM Financials, a financial services company, at an entrepreneurship summit in Delhi. It proved to be the turning point in Prashant’s investment journey.

Steadily, both developed a long-term professional relationship. Prashant soon understood that Panchmatia could help him manage his finances. Since they came across each other, there has been no looking back for the Bhaskar family. As things stand today, the family has put in place a perfect execution plan for their financial goals.

So, what was done to put Bhaskars’ investment journey back on track?

Panchmatia, who is also a blogger, financial coach, and seasoned investment professional, made sure Bhaskars understood the concept of rupee and dollar cost averaging. He explained the benefits of this concept from day one.

“I strongly believe there has not been a better invention than the systematic investment plan or SIP in the world of finance after the invention of the joint stock company and mutual funds. SIP is a great financial tool capable of making anybody a millionaire if planned well with discipline and patience. Given the way SIP works, it fits suitably across the market cycles—be it the uptrend, downtrend, or volatile market situation. In fact, SIP is an investor’s best friend,” says Panchmatia.

The SIP concept, which takes care of the cost averaging, clicked with the Bhaskars. With belief and confidence in Panchmatia, Bhaskars did not waste time to start a monthly SIP and gradually increased it five-fold. Since their association began eight years ago, Bhaskars’ portfolio has grown nearly 2.5 times against the initial invested amount. “This would not have been possible without Prashant’s sincerity towards disciplined investment,” says Panchmatia. On the other hand, Prashant gives credit to Panchmatia, saying that without the latter’s timely professional advice, his portfolio would not have grown the way it grew.

“Since Nirav came into the picture, we almost got a licence to spend,” says Prashant. His wife Ashwini adds, “Knowing that our investment goals are being attended to by the rules Nirav put in, we could make spending decisions without worry or guilt.”

Lessons Learned

Professional financial advice matters: Despite being highly qualified, professionals sometimes need help putting their investments in order. Bhaskars, who understood investment nuances, now accept that specialists are required to get this specific job done effectively and efficiently.

To beat inflation, one must invest in equities: Inflation is one of the biggest menaces which can potentially unsettle your finances. Investors should understand if returns are not inflation-beating, they may impact future living standards. Equity investment, especially Indian stocks, is the only way to generate long-term inflation-beating returns. And a dedicated mutual fund portfolio emerges as a natural choice.

Dedicated financial goal planning: Bhaskars were clear about their financial goals, like retirement and kids’ higher education abroad. Meeting these goals required a dedicated financial plan which Panchmatia offered through a suitable mutual fund portfolio.

Equity is for the long term: Investors should come to equity investments with a goal-based approach and a clear vision of staying invested for the long-term, given the volatility in equity during the short to medium term. The longer one stays in equity, the higher the investment
growth prospects.

Asset allocation is the key: All asset classes have different cycles. So an asset allocation strategy is a must  for optimal returns. As suggested by Panchmatia, Bhaskars carried out periodic rebalancing of their portfolios. This helped them maintain a reasonable allocation between equity, hybrid, debt, and gold mutual funds. It was a rule that Bhaskars never tinkered with across the market cycles.

Nothing better than SIP to create wealth: Having learned the importance of SIP quite early, Bhaskars used these vehicles extensively to build their corpus. They agree that SIP is an investor’s best friend for long-term wealth creation.

Conclusion

Recently, Prashant informed Panchmatia from Melbourne that his elder kid acquired an airplane pilot licence while studying software at Australia’s top university. It gives a great sense of satisfaction to Panchmatia as he believes his success lies in the success of his clients. Prashant states, “For an entrepreneur, having a strong Amfi (Association of Mutual Funds in India) registered mutual funds distributor by your side can add significant stability to your financial health.” It empowers the person to hedge against risky life decisions like starting a new venture or shifting to a different country.

Disclaimer

The financial journey of Prashant Bhaskar is based on the “personal opinion and experience” of Nirav Panchmatia, a mutual fund distributor and founder CEO of AUM Financials, and should not be considered professional financial investment advice. No one should make
any investment decision without first consulting their advisor and conducting research and due diligence.

Nirav Panchmatia, MF distributor and  founder CEO of AUM Financials