Back in 1998, Dhaval, a chartered accountant used to invest only in PPF to save taxes. He contacted Nashik based Ajay S. Kale, financial advisor on the advice of the bank employee when he was refused interest on his PPF investment for a month.
Ajay recalls, “According to PPF norms, the government pays interest only if PPF subscribers deposit money in their PPF account between the 1st and 5th of every month. Dhaval had deposited money through a cheque on the 3rd or every month, but the government refused to pay him interest as the bank delayed the cheque settlement. However, we approached the government and the bank with the rulebook and evidence of cheque deposit. As a result, I managed to help him recover the PPF interest amount.”
From then on, Ajay became Dhaval’s friend and a trusted financial advisor, guiding him on all aspects of investment. Dhaval started with an initial investment of Rs.10,000 in two equity funds for his children education.
Everything was moving smoothly until Dhaval passed away at the age of 49 due to illness in 2002. As Dhaval was the only earning member in the family, his wife Meenakshi was worried about her children future. The family had already spent a lot of money on his treatment.
They had to sell off Dhaval’s office and practice. The proceeds from office and the practice put together with the insurance amount was Rs.25 lakh.
Since Ajay was a good friend of Dhaval and his financial advisor, Meenakshi sought his advice on her investment needs. Never having dealt with such a large corpus till then, Ajay decided to take advice from a top fund manager on asset allocation and portfolio construction. Ajay said, “I met a top fund manager at a conference in Pune. He explained to me that the market PE was less than 10 and it was a good time to invest as he expected the market to go up. He advised me to invest at least 40% of the corpus in equity funds and the rest in debt.”
Following the top fund manager’s suggestion, Ajay advised Meenakshi to invest Rs.10 lakh in equity funds for growth and Rs.15 lakh in bank FD and post office savings for regular income to meet household expenses.
Initially, Meenakshi was sceptical as her relatives warned her that she would lose heavily if she followed Ajay’s recommendations. However, Ajay explained to her that over the long term, equity would proved to be the best way to grow wealth. Ajay also assured her that if she would earn 4% above FD returns is she stayed invested for 10 years. Since Ajay was a trusted friend of her late husband, she agreed to invest in mutual funds in 2003-04.
Impressed by the performance of equity funds, she started SIP in mutual funds from the surplus amount she managed to save from the monthly household expenses.
However, during 2008-09, when markets were low, Meenaskhi wanted to exit mutual funds. Ajay told her that falling markets presented opportunities to accumulate more units and advised her to stay invested and top up her SIPs to benefit from the equity funds.
Ajay’s advice worked out well for Dhaval’s family. Today, her portfolio has grown to Rs.1 crore.
Thanks to Ajay, she has been able to fund her children’s education. Her son has become a chartered accountant and daughter is now a company secretary. In fact, Meenakshi recently set up an office for her son. She also owns a bungalow in Nashik and holidays abroad every year.
Ajay’s advice helped the family fulfil their financial goals even in Dhaval’s absence. Today, Ajay is the trusted financial advisor of their children and relatives as well.
Names of Ajay Kale’s client have been changed to maintain the privacy.