78 Outlook Money March 2018 http://www.outlookmoney.com
Saving For A Secure Future
Regular saving and investing for the long haul are critical for achieving a
realistic goal of returns
My Plan
V
ishal Khosla, 41, is
married to Arti, 40. They
have two daughters. The
family lives in Noida
while Khosla runs a successful
consultancy business in Delhi. Due
to the nature of his business, Khosla
has not been able to predict his cash
flow through the year. As a prudent
measure, he pulls out profits from
his business to pay for household
expenses, and he parks the rest in
bank fixed deposits (FD). He has
never invested in stock markets
and is not familiar with investment
products other than FD and Public
Provident Fund (PPF). Apart from
owning the house where the family
lives and his office, he has FD and
the funds for education, marriage
and retirement? How many years
they think they can live?
After learning about these facts,
we shared our views on each asset
class and explained to them about
the concept of asset allocation. For
example, if were to invest 40 per
cent of the lump sum corpus in debt
and 60 per cent of the corpus in
equity, then a 15 per cent return on
equity will lead to a 12.6 per cent
return on the portfolio. However, it
will protect the portfolio downside
significantly, in case the equity
markets were to fall by 20 per cent.
These discussions helped to
clarify several myths relating to
expected returns, market volatility,Financial Planning of Vishal Khosla is based on the “personal opinion and experience” of Moneygain Consultants Ltd, and that it should not
be considered professional financial investment advice. No one should make any investment decision without first consulting his or her own
financial advisor and conducting his or her own research and due diligence.DisclaimerPPF balance of `15 lakh. He does
not own any other assets. He needs
to save for his daughters’ education
and marriage, now aged 7 and 11. He
also needs to save for his retirement.
When Khosla approached us at
Moneygain, the key challenges in
front of us were:
Lack of subject knowledge
Non linear cash flows
Low asset baseTo begin with, we first listed the
family’s goals in monetary terms.
How much would they like to spend
on their daughters’ education and
marriage? How much will be the
cost of inflation in the foreseeable
future? At what age would they need