Mandeep Sharma (40) and his wife Sheetal Sharma are proud parents of two daughters Myra and Shyra. When the Sharma couple were in their mid 20s, they were bestowed with their first child in 2009. It was a happy moment for them as both entered parenthood - beginning of a new phase in their lives.

As things settled down and Myra turned one year old, the Sharma’s were worried for her future as any parents would do. Given the fact that inflation was on the rise while the world was barely out of the 2008 financial crisis then, the Sharma couple’s concerns were quite legitimate and valid.

Mandeep and Sheetal’s prior concern was availability of adequate corpus for Myra’s higher education. They had a clear understanding that if the future financial goal for their daughter is not planned in advance, it would be difficult to manage. They had a fair knowledge about the importance of early financial planning.

Though their intention and aim was clear, the Sharma’s did not know how to go about it. They required someone who can professionally help them plan their finances. It was in October, 2010 that they met Jugal Marwaha, their mutual fund distributor, and their financial journey began.

Jugal Marwaha, a seasoned financial planner, readily understood the young Sharma’s concerns. “They were quite young and excited parents when I first met them. I gave them a patient hearing and understood their financial condition and what they desired,” recalls Jugal Marwaha.

Mandeep categorically told Jugal Marwaha that he wanted a minimum corpus of Rs 25 lakh once Myra turns 15. It was quite a doable job as the financial goal was 14 years away. But before that there were certain basics of investment which Jugal Marwaha shared with the Sharma couple. “First and foremost, I told them that all financial investments must be linked with goals. Goal planning helps investors remain disciplined and focused during the course of investment tenure,” explains Jugal Marwaha.

What we did?

To start with, Jugal Marwaha told Mandeep about the systematic investment plan (SIP) and elaborated how small but regular investments can create wealth in the long-term. Further, he also ensured that return expectations are moderate but enough to reasonably beat the inflation. Sharma’s readily agreed to the outlined plan and started with a monthly SIP amount of Rs 25,000 in October, 2010.

That time, post the partial recovery after the 2008-09 crisis, Indian stocks were in consolidating mode which was stretching into a long stagnating period. Even till 2013, the markets had gone nowhere which was quite a frustrating experience for the majority of the investors.

It was quite natural for investors to voice their concern if their investments were not making any reasonable returns despite staying in the market for three years. In 2013, while the stock markets remained range-bound, Sharma’s SIP investments could deliver a paltry 4% CAGR. This was certainly quite a low return against Mandeep’s expectations.

Sharma’s grew concerned whether they were on the right investment path. Mandeep, who turned father of yet another baby girl Shyra, communicated the same to Jugal Marwaha and requested if he should do away with SIP as he was losing patience. Jugal Marwaha understood it was time to strongly handhold the Sharma’s so that they can sail through the troublesome times.

Jugal Marwaha told the Sharma couple that, at times, returns from markets are not linear unlike traditional avenues with guaranteed returns. “I explained to them continuous non-performance does not mean the market will not perform going forward. It is just a matter of time and patience is the key for successful investment. One needs to stay invested in turmoil when goals are far. Moreover, I also reminded them about their financial goals they started their investment journey with,” reminisces Jugal Marwaha.

In the first three years, Sharma’s cost of investments remained low as they could accumulate quite a large number of units at less prices. Accumulation of units at lower valuations is the harbinger of superb wealth creation in the future. The key is to stay put. Jugal Marwaha conveyed this to Mandeep and Sheetal in an effective way.

The meeting with their mutual fund distributor calmed down Sharma’s. Though for the short-term they had missed out on their long-term vision and were in panic mode as reports of investors leaving mutual funds were rampant during that phase. They were back on their investment trajectory with a restored faith in Jugal Marwaha.

The decision of staying invested without stopping SIP paid off well. In the very next year in 2014, the market witnessed the much awaited rally and the CAGR of Sharma’s investment jumped all the way to 25%. Not only their faith in the market got restored, their confidence and trust in Jugal Marwaha went up manifold giving a push to their long-term relationship. Since then, the Sharma couple never looked back.

As Myra is turning 15 years soon, they are happy that they have adequate corpus to take care of not only Myra’s higher education but Shyra’s upcoming needs as well. According to Mandeep, “We just had a vision to fulfil our financial goals. Jugal Marwaha and his team made that possible. I have no hesitation to say that had he not been there we could not have created wealth. His continuance guidance, financial education, and his skills to satisfy all our concerns and questions greatly helped us in our financial journey so far.”

Illustration Table  for Case Study — Mandeep Sharma & Jugal Marwaha

• Sharma’s new parents to a girl child, were worried about financially securing their kid’s higher education in 2010.
• Once their daughter turned one year old, they needed help of professional advisor
• They wanted to plan their finances but needed a strong hand holding
• Jugal Marwaha, their MFD, explained to them about SIP and long-term investment
• Investments need to be goal-focused
• On Jugal’s advice, Sharma’ s began with SIP worth Rs 25,000
• During 2012-13,  Jugal helped them remain on the investment track as Sharmas lost patience
• Jugal Marwaha suggested Sharma’s not to panic and lose confidence

Sharma’s kept on accumulating units at lower price while markets remained stagnant till 2013

A sudden rise in CAGR from 4% to 25% in 2014 helped Sharma’s restore confidence in markets

Sharma are happy with their investments as they are capable now to achieve goals for both of their daughters

Lessons to be learned :

• Investments have a purpose. They should be linked to financial goals. Goal-based investment keeps investments on track.
• Scheme selection should be in accordance with your goal, tenure and risk appetite.
• Keeping a frequent watch on investment portfolios serves no purpose. One should review portfolios once a year with your advisor and make necessary changes, if required.
• Patience is the key for successful investment. Since markets could be volatile in the short-term, losing patience and taking investment decisions could prove hazardous.
• Last but not the least, every investor should have trust in his Financial Advisor who is nothing but a financial doctor to keep your financial health in order.

Jugal Marwaha, Managing Director of Marwaha Financial Services Pvt. Ltd.

Disclaimer

The views are personal and are not part of the Outlook Money editorial Feature.

Disclaimer

The financial journey of Mandeep Sharma and his wife Sheetal Sharma Girish is based on the “personal view and experience” of Jugal Marwaha, Managing Director of Marwaha Financial Services Pvt. Ltd., and should not be construed as professional investment advice. No one should make an investment decision without first consulting with their financial advisor and conducting research and due diligence.