Relationships Talk

Sachin Bhatnagar realized early that he needed professional help to break the low risk appetite which he felt was hindering the progress to his goals. He attributes it to a middle-class upbringing where savings were always channelled into government-sponsored savings schemes or bank deposits. But the ex-Air Force officer who kept up with the developments in the investments space with his reading knew that their savings could do a lot more. Sachin and wife Shivani both now work in the private sector and are committed to saving for their dreams many of which are centered around their 14-year-old daughter Sohani. A corpus to fund her education in a foreign university was top on the list as was her marriage expenses, a much-desired holiday abroad and early retirement.

The Bhatnagars decided that the services of a financial planner would help them get to their goals more efficiently and this led them to Taresh Bhatia, a Sebi-registered investment advisor and partner, Advantage Financial Planners LLP.

Taresh understood that Sachin was looking for professional support to get their financial house in order. He started with their goals.

“The first step was to help them define their goals clearly. It was important to prioritize them because their savings would not have supported all their needs and wants at that stage,” said Taresh. The idea was to add to their goal list as their savings improved which they actually managed to do in the third and fourth years. The next step was to do a forensic evaluation of their investments. “Their existing investment portfolio was not aligned to their goals and merely a drain on their savings,” said Taresh. The culprits were multiple low-yielding insurance policies including expensive unit-linked plans, the legacy of a previous tryst with an insurance agent. Taresh explained the risks to their goals of continuing to hold the low-return insurance products.

His solution was to surrender the policies that had no place in the investment portfolio so that the family’s savings could be better utilized in more appropriate products. “It took me some deliberation and time to gather courage before I could make the decision to exit at a loss,” said Sachin. He sees a silver lining in this experience too.

“Even though the insurance policies wound up doing more harm than good to my finances, it forced me to build the discipline to budget and save so that I could pay the premiums. This discipline has stood me in good stead,” he said.

The second challenge Taresh faced was to work on the risk aversion that Sachin’s conditioning had built in him. He used risk profiling to show Sachin how unfounded his fears were given the financial situation of the double-income household and convinced him to include equity for long-term goals that were more than 10 years away, like retirement.

“I used the first year to assess how Taresh’s advice worked for us,” said Sachin. And it did. Along with an equity focus aligned to the long-term nature of their goals, the Bhatnagars are now adequately covered with life insurance, health and other essential general insurance products. Sachin actively engages in selecting the investment products with Taresh’s inputs and analysis. They use an online platform to route their investible surpluses and to monitor and rebalance the investment portfolio on a schedule so that the asset allocation continues to reflect their goals. And there is place for fun too in their financial plan. Some of the profits from their equity investments realized on rebalancing the portfolio was even used for a family holiday.

Sachin is planning for early retirement so that he can give back to society. As a certified life coach, he wants to work with youngsters to help them realize their passion so that the career they choose is the one they enjoy. He now has the confidence that his life’s plan and financial plan are synchronized allowing them to follow their dreams.

Mistakes I won’t repeat

1. Play too safe with my investments

2. Invest in products that are not aligned to my goals

3. Not prioritize my goals