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Many Indians invest in gold but are reluctant to sell it to meet any expense. Also, when markets fall, the first instinct is to exit all market related investments such as mutual funds.
However, Mumbai MFD Sadashiv Phene convinced his client not to redeem money from mutual funds during market fall and instead, recommended him to sell gold to fund children’s foreign education. After a few years, this client not only bought gold equivalent to what he had sold but also shifted to bigger apartment and funded wedding of his three daughters with the help of his mutual fund investments.
Let’s rewind to 2013 to know what really happened. One of Sadashiv’s clients approached him for redeeming mutual funds to meet his daughters’ foreign education expenses. “That was the time when both equity and debt funds were underperforming and his overall portfolio was not in good shape. Unhappy with the performance, the client wanted to redeem all his MF investments to fund daughter’s education by redeeming even if it meant booking losses,” said Sadashiv.
He added, “He came from a humble financial background and had three daughters to look after. Such untimely redemption would have affected his wealth creation journey.”
Sadashiv did not want his client to book losses and came up with an alternative. He said, “Indian households usually have some form of physical gold that typically lies inside a cupboard or locker. So, when I asked the client about his holdings, I came to know that he held a large quantity of gold. I suggested meeting college expenses by selling gold. However, he was reluctant to sell it, especially during the time when gold was performing better than equity and debt funds in 2013.”
Sadashiv asked him and his wife when was the last time they took gold out from the locker. The couple had not used their gold for ages; they realised that it was lying idle. Additionally, he also reiterated the importance of staying invested across market cycles to create a sizeable corpus.
After multiple discussions, his client finally agreed, sold gold and enrolled his two daughters for higher education overseas. The sale proceeds were largely sufficient and only a part of these expenses was met through minimal mutual fund redemption.
This kept his portfolio more or less intact, which grew over time. Interestingly, in 2019 he bought a similar quantity of gold that he had sold earlier and also purchased a bigger house later. Moreover, he met the wedding expenses of all his daughters from the same corpus.
Today his daughters are well settled; two of whom are residing overseas.
“My client now tells me that it was a wise decision to sell gold then. My portfolio value has multiplied over four times, while the value of gold has only doubled”, shared Sadashiv.
As a quick tip on converting investors with the traditional mindset to invest in mutual funds, Sadashiv said, “It is important to have an understanding of other asset classes along with their valuation. Also, make use of comparative narratives for highlighting the advantages of mutual funds over traditional investments.”
Recognising his efforts in making a big difference in clients’ life, Axis MF and Cafemutual came together to celebrate the extraordinary work and accomplishments of MFDs through Sanjeevani MFD Awards 2023 at Cafemutual Ideas Fest. The awards felicitated eight inspiring MFDs who are ‘Sanjeevani’ for their clients and have become an indispensable part of their lives. Sadashiv was one such winner.
