Case Studies
Timely Intervention reverses a Retirement Decision
Manoj Sarkar was in his late forties working with an MNC and drawing a handsome eight-figure salary. Yet he and his family were not living the lifestyle they truly wished to lead due to some unforeseen expenses. He wanted to retire soon on the basis of a corpus that seemed large today. The corpus had given a substantial rate of return on the investments the family had earlier made.
We did a retirement plan for the client drawing up multiple scenarios and showed him that he needed to keep the show running not just for the special expenses but also for his sustained lifestyle in his retirement years. Manoj got the jolt of his life when he saw the staggering figure of inflation-adjusted expenses only on his household and lifestyle expenses.
He had almost made up his mind with his resignation letter but when he saw the reality, although reluctantly, he withdrew his decision and decided to continue to save towards his retirement. We understand that reality is hard to digest but the better prepared individual can plan and always get over the toughest of circumstances. Since then we have been carefully allocating some funds towards his retirement which goes into the retirement funds which will see him through. Doing the plan helped us show him that the rate of return in itself alone doesn’t matter but the absolute amount on which it is earned also matter.
How the bigger picture helped our client buy two homes in Mumbai
Rajan Kapoor began investing through monthly SIPs in equity funds for the first time in his life in early January 2008, just when the global financial crisis had broken out. With every passing month he wasn’t very happy looking at his depleting portfolio, especially with all the media noise around him.
We suggested that for an SIP model, each market fall was an opportunity in disguise to average his cost of acquisition. But Rajan just wasn’t prepared to stomach this. We were making a case that this phase will blow over too but he rejected our opinions and come January 2009 he insisted that he wanted to stop and didn’t want to listen to any further advice. Soon after the markets turned around in 2 months and in May 2009, we showed him the bigger picture, i.e. how further low he could have brought down the average cost of acquisition had he continued for a few months more.
We showed him the gap between the breakeven NAV needed and the average cost of acquisition and how much more wealth he would have created had he allocated more towards equity as opposed to the bank fixed deposits that most consider safe. Seeing the back-testing results of what could have been, the client started trusting us fully from that day and increased his SIP 10-fold for a few years. This then became a huge corpus that was able to book two flats in two very prestigious projects in Mumbai.
Names have been changed inorder to protect our client's identity.