A newly married couple Gaurav and Nita approached Mumbai based IFA Tejal Gandhi to seek financial advice. While Gaurav has recently switched his job to work for an ad agency, Nita works as a teacher.
Gaurav came to know about Tejal through his father-in-law who is her client.
The couple had come to Tejal to seek her advice on how they could buy a house. Tejal found that the couple was confused, as they did not have any concrete plan on how to fund this financial goal. Also, they did not have clarity on their other financial goals. “The couple just wanted to invest for the sake of savings. They did not have any financial goals in mind,” said Tejal.
Tejal requested them to take some time and list down the three important financial goals that they want to achieve. In the meanwhile, Tejal advised them to create an emergency corpus of at least six months of expenses in a liquid fund.
In the second meeting, the couple listed three goals – buying a house, going on a foreign trip and starting their own venture.
However, the couple's first priority was buying a house. They wanted to take a personal loan to fund the down payment and home loan to fund the rest. However, Tejal advised them not to take such decisions in haste.
Tejal explained to them the pros and cons of taking a home loan and a personal loan at this stage. She calculated EMIs for both the loans to make them understand that a major portion of their income would go to fund these EMIs. This helped her make them realise that they should wait for a few years to build a corpus to fund at least the down payment component of the loan. “Gaurav had recently changed his job. It is better if they wait for three years as their income would also increase by then,” she says.
To build a corpus for down payment, Tejal initiated SIPs in balanced funds for them considering the medium term horizon of the goal. “Although balanced funds have higher equity exposure, the debt exposure of these funds cushions investors in the event of a downturn,” says Tejal.
Another medium term goal was to create a fund for their travelling expenses. “While interacting with them, I came to know that they are not looking for any long term solution such as retirement or child-planning. They want to spend money on life experiences like travelling abroad. Since, they were in no hurry to achieve this goal, I advised them to invest in a diversified equity funds for four to five years,” says Tejal.
Nita is also an artist and want to do something on her own. She sought Tejal’s opinion to create her a plan that could help her build sustainable business. To start with, Tejal encouraged her to sell her artwork while keeping her day job. The additional money from artwork would go to fund her future endeavour.
Currently, the couple are in a process of accomplishing their first dream i.e. buying a house. Thanks to Tejal who helped them create a lumpsum amount to fund the down payment of the home loan through balanced fund.