Our Fifth Investor Story- By Preeti Zende

Money plays an important role in everyone’s life. People throw so many quotes or lines stating money is just a piece of paper, cannot buy happiness or one should not give importance to money bla bla bla. But friends let me tell you, those who are financially well they only preach others such kind of things. Ask a man who can not  fulfill his son’s dream because of lesser money, ask a mother who cannot feed adequately to her kids because of no money. They won’t take such Gyan.

So money is equally important in everyone’s life as relationships are. One has to give time and attention to nurture  the relations as well as money so that they grow and be your source of confidence throughout your life.

My fascination with money management and investment starts from school days itself.. As I was a bright student everybody thought that I would be an Engineer or a Doctor. But I decided to pursue my career in the financial world. I followed my dream and started working in the Finance sector. Since my first job, I decided to achieve Financial Freedom as early as possible with proper financial planning.

But after my marriage, I got a super speed breaker bumper in my life in the form of my better half. My husband is totally opposite. He, being an IT guy, was not at all serious about saving or investing. He was earning handsomely so he never cared about money management and proper financial planning. After marriage, my real test started where I had to work on my marriage as well as the family’s financial well being. You all will love to read OUR investment journey which I am enjoying with my lovely husband.

Our life after marriage started with lots of love but when money matters come we have some differences. It is not that husband didn’t know about the importance of investments or financial freedom but he lacked the vision and discipline as well as mental push. He was just doing random investments mainly to save taxes. So there was no thought process in his investments. We sat together, discussed many things, and jotted down the plan which we still follow. First, we agreed on these 5 points:

1. We decided on our saving rate: As we were newly married and both were earning we decided to save at least 60% of our respective salaries. We both agreed on this and stuck to it. Even now we could save 50% of our family income.
2. Opened “Investment” account: We both had individual salary accounts. Still, we opened one joint account and named it an Investment account where we started transferring 50% of our salaries as soon as our salaries were credited. Thus after marriage, we started spending after SAVING. We still follow Income-Saving= Spending formula.
3. We strictly analyzed our monthly spending: We always tried to curb unnecessary spending so that we can save maximum and we become conscious spender. This approach is hugely benefitting us now.
4. We decided on our life goals: When we started working together on our financial plan our financial goals were retirement and buying our home. Then over the years, many other goals have been added.
5. We drafted a detailed financial plan: We bifurcated this plan in 2 parts hedging of risks and investing as per Goal-based investment theory..

Once our initial layout was set up we went into a detailed investment process.

1. We previewed previous investment done: As hubby was just doing random investment for saving taxes he had some good investments products as well as some not so needed investment products. He has opened a PPF account in a post office when in his first year of the job. Once he moved to Bangalore he was not able to invest in PPF as no online facility available in the post office at that time. So he purchased ULIP in that year to save taxes under Section 80 C. Then some NSC and endowment plans. The first thing we did that we transferred the PPF account from post office to our bank and since then started online payment. After the initial lock-in period surrender ULIP plan and endowment plans and get term plans for both of us.
2. Setting aside emergency fund: This was an altogether new concept for Hubby. He never had any liquid cash set aside for more than 50k. Slowly and steadily we worked on this and set up an adequate emergency fund. We had 6 months of our monthly expenses, monthly part of yearly expenses, and insurance premium amount in an emergency fund. Now we have topped it up to 1 and a half years of expenses. We have 1/3 of emergency fund equally distributed in our savings account, 1/3 in sweeping in FD’s, and 1/3 in liquid funds.
3. Insurances: Before starting investing one should see whether s/he has covered all possible risks of life which may drain out their finances if these eventualities are not covered by insurances. Our situation was not great on this front when we marry. But together we worked over it and now we have adequate insurances so that our loved ones are secured financially if we are not there.
4. We both have an adequate Term insurance cover.
5. We have a health insurance policy by our side. We have a 5L family floater as our base plan and have a 25L super top-up plan. We are thinking of upgrading our super top-up plan if the corona situation worsens in near future.
6. We have a critical illness policy as well as accidental benefit standalone policy for both of us.
7. Investments: We have, over the years, invested in different asset classes so that we can have different asset allocation for our portfolio.
8. Equity asset class: We invest in Equity mutual funds as well as Direct Equity in the portion of 70:30. We have some good bluechip stocks in our kitty. We have Nifty Index Fund, Multi-cap, some exposure in mid and small-cap. We invest in MF through SIP route. If we find a good opportunity we top up Nifty fund or buy good stocks at a better valuation.
9. Debt asset class: Hubby is having EPS and PPF. When I was working I too had EPF and PPF but now as I am self-employed so currently I am having PPF and NPS in my kitty as Debt instruments. We have some FD’s as our emergency fund and liquid and arbitrage funds. No other debt mutual funds.
10. Cash and cash equivalent: Holding cash in a bank account just a little bit more than required as per the Emergency fund level.
11. Real estate: We have one flat where we reside. We took home loan but within 10 years we repaid it. No more exposure in real estate.
12. Gold: We invest in digital gold. We buy Sovereign Gold Bonds in the secondary market. This gold is purely for investment. We do not have exposure more than 5-10% in Gold.

This way we are now having a concrete structure in the form of the formal financial plan on which we are working together. Over the years we always focus on the things which are in our hands that are saving maximum, investing wisely, sticking to basic financial products rather than running behind the returns. Working towards building family fortune together is the most amazing thing which we both are experiencing. It not only strengthens our bond but also helps in building strong net worth by our side.

Thanks, Gayatri for giving me the opportunity to share my rather OUR investment journey.