Today weddings have become a mega affair - what with the many functions related to it - engagement party, cocktail bash, sangeet, pre-wedding ceremonies, reception and so on. And to finance these entire activities one requires proper management of finances. This is where the role of an advisor becomes important as he can help you plan saving for the wedding years in advance.
Here is the experience of a few advisors who have managed to build a corpus for their clients to enable them to have the Big Fat Indian Wedding.
Ajeett Tripathi, Wealth Valley, Varanasi
In 2006, I met an investor who was a carpet exporter. While we were talking about his future investments, I got to know that he was fond of his daughter and was very excited about her marriage. So I asked him where he would like to get her daughter married. He promptly said at some beautiful destination. However, he had not started planning for the finances for marriage.
Meanwhile, I realised he had limited his investments to fixed deposits and debt instruments. When asked why he was avoiding exposure to equity, he said he did not trust the stock market.
Hence, I started explaining to him about equity investment and how over a period, equity could multiply his savings. He was tough to convince but I it gave my best. Since he was a businessman, my pitch to him was that through equity he was making an investment in somebody's business and as with any business, it required patience as the business would take 5-10 years to grow. To make him trust equities, I even showed him business models of all those listed companies he could invest in.
Finally, he was convinced to invest in equities. Since his FDs were maturing in the next few months, I asked him to shift that money to equities. He started with allocating Rs1.5 crore in the first year. Later he invested Rs.1.5 crore more for two years each taking his total investment to Rs.4.5 crore.
I allocated 80-85% of the fund towards equity and the remaining into debt funds. He stayed invested for almost 9 years. However, there came a time when he was scared and wished to redeem his investment during the 2008 financial crisis. I kept telling him that this just a cyclical nature of the market and that his funds would recover soon. He stayed put and did not redeem.
In 2015, he was surprised to see his total investment topping Rs.17.8 crore with which he was able to organize a lavish wedding for his daughter in Switzerland.
Nisreen Mamaji, MoneyWorks, Mumbai
We all know that a destination wedding has become a big aspiration for many. I met a couple who wanted to get married in Thailand. They were seeking financial advice in order to invest for this goal.
The first time I met them, they told me that the wedding was in 24 months. Then I asked them a couple of questions like what is the estimated cost of food, stay, venue and other expenses.
In order to come to an amount, we discussed a number of events that would take place and what would be the approximate amount to be spent on each.
Thereafter, I asked the couple to call a wedding planner and contact the exact hotel in Thailand, and look for flight tickets and other expenses. Later we arrived at a budget of Rs. 25 lakh for the wedding.
After further discussions, I got to know their parents were going to chip in around Rs.15 lakh. In addition, the couple already had savings of Rs.5 lakh. Hence, they had to manage a shortfall of Rs.5 lakh.
I advised them to invest in balance advanced fund, as it would secure their short-term investment.
The couple, therefore, started SIP of Rs.20, 600 every month, which brought them an average return of around 10%.
After two years, there were happy to have accumulated Rs.5.5 lakh that was slightly more than they expected.
