Financial Planning ‘If the initial journey is smooth, investors will stick to equity funds for long’

‘If the initial journey is smooth, investors will stick to equity funds for long’

Kavitha Menon shares how she helped her client who was in a debt trap while Praveen Chhajed brought a conservative client into equity investing even though he had suffered losses in the past.
Darshita Shah Jan 13, 2017

Kavitha Menon, Mumbai based RIA

One of my friends who was working in an MNC approached me with a unique problem. He had bought six properties and a major portion of his salary went into repaying the loan that he had taken to acquire these properties. He fell into a trap of real-estate agent who sold these properties with a lure of 100% appreciation within a year. However, property prices remained flat even after two years.

I advised him to sell at least two flats immediately – to meet household expenses and repay portion of the home loan and credit card balance. I advised him to park the remaining amount in liquid and income funds and rent out rest of the flats. This cash flow also went to repayment of the loan. After this clean-up exercise, this client was able to start an SIP of Rs. 10,000 within a year. Currently, he owns three properties and has a good portfolio of mutual funds.

Praveen Chhajed, Pune based IFA

A few years back, a prospective client approached me seeking advice on his retirement corpus. The first thing he shared was his reservation about equity investments due to a bitter past experience. I sensed that recommending equity funds would not suit his risk appetite and advised him to park some portion of his corpus in debt funds to get better returns compared to bank FDs.

Over a period, this client realized that mutual funds have a potential to beat inflation and deliver good returns. I advised him to invest a portion of booked profits in balanced funds. He put his money in balanced funds which fetched him 11% CAGR over three years. Now he has started investing in diversified equity funds.

This incident helped me understand that advisers need not encourage first time investors to get into equity products. The ideal starting point would be liquid funds. If the initial journey is smooth, investors will stick to equity funds for long.

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1 Comment
Felix Zeman · 3 months ago
Please read my provider's BG/SBLC Sale Transaction Procedure below and see if it will suit your requirements.


1.    Buyer submits Letter Of Intent (LOI) with full banking coordinates (there must be sufficient cash funds in this account), Enlarged 140% Colour copy of Passport , Client Information Sheet , Certificate of Incorporation (if applicable), Corporate Resolution (if applicable), Non-Solicitation Statement, and an Irrevocable Fee Protection Agreement .

2.    After conducting due diligence, the Seller will countersign the LOI and return it to Buyer including details of the BG Issuing bank, and Seller’s Passport copy. This LOI automatically becomes a full commercial recourse contract and will be notarized to avoid contract breach and Buyer will be required to take care of notarization expenses of the contract documents here in UK. After notarization of the contract documents here in the UK, both parties shall lodge the executed contract with their respective Banks.

3.    Within two (2) banking days, the Seller’s Bank shall send a PRE-ADVICE SWIFT MT199 or MT-799 to the Buyer’s Bank. (EXHIBIT A )  The PRE-ADVICE shall be valid for  four (4) banking days only.

4.    Within the same banking day, the Seller shall email a courtesy copy of the PRE-ADVICE SWIFT MT199 or MT-799 to the Buyer for confirmation. Within three (3) banking days after authentication of the PRE-ADVICE SWIFT MT199 or MT-799, the Buyer’s Bank shall reply and send a  SWIFT MT-799 to the Seller’s bank and a courtesy copy shall be sent  to the Seller’s email.

5.    Within three (3) banking days, after authentication of the Buyer’s SWIFT MT-799, the Seller’s BG Issuing Bank shall send the Bank Guarantee via SWIFT MT-760 to the Buyer’s Bank  ( EXHIBIT B ) and a courtesy copy shall be sent to the Buyer’s email. The Buyer’s bank verifies and authenticate the BG sent via SWIFT MT-760.

6.    Within three (3) banking days, after authentication of the BG sent via SWIFT MT-760, the Buyer shall send payment to the Seller via SWIFT MT-103 and concurrently pay Consultants commission fees of Two Percent of each tranche face value. Courtesy copies of the commission payments shall be sent to the respective consultants/beneficiaries and their paymasters.

7.    Within seven (7) banking days after authentication of receipt of payment to the Seller, the Seller’s BG Issuing Bank shall send the hard copy of the BG to the Buyer’s Bank  via Bank Bonded Courier.

8.    All subsequent tranches will be based on the same procedures until collateral or funds become exhausted.

9.    Any unauthorized calls by any party or its representative lawyers to probe or communicate in an improper way to bank(s) in this transaction shall be prohibited and contract terminated.

10. Please, Ready, Study and Understand VERY WELL, we will work STRICTLY base on this Transaction Procedure.


Contact Me Via Email:-

I look forward to a mutually beneficial business relationship.


Felix Zeman.
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