Your appetite for risk increases when you have a economic cushion to fall back,” said Bengaluru-based Susobhan Choudhary. And that ‘financial cushion’ helped when Choudhary, who is in his early 40s, moved to Dubai to start his own business in 2018. Quit a paying job. He now runs an advertising agency and a food enterprise.
“I took the leap only when I was sure that I had enough liquid savings to sustain me without compromising on the quality of my children’s education and the lifestyle of my family,” he said. When Chowdhary quit his job, he had a six-month emergency fund for family expenses and an 18-24-month runway for his business. It also helped that his wife Saira Samuel took up a job here soon after returning from Dubai.
Mint spoke to the couple and their financial guide Rohit Shah, chief executive of SEBI-registered investment advisory firm GYR Financial Planners Pvt Ltd, to understand how the couple compromised other financial goals and their approach towards financial without starting your own venture. Plan.
develop risk appetite
The birth of their first daughter in 2012 prompted the couple to think about financial planning. “Till then we were living a king-sized life and had no future plans. whatever Investment We were largely liquidated in real estate and some endowment insurance policies. When Saira took a sabbatical and faced all the responsibilities and rising expenses, I realized that I have already lost a lot of time and financial planning needs to be done proactively,” Choudhury said.
Real estate made up about three-quarters of the couple’s investment portfolio in 2012. When the couple collaborated with Shah in 2013, Choudhary was on the lower end of the risk spectrum. “I grew up in an environment where we were trained not to take too much risk, to be in a safe job, and to invest in safe products, where the chances of losing money are negligible.”
On Shah’s advice, the couple diversified their investments into equities through mutual funds (MFs), as most of their goals, including their daughter’s education, marriage and her own retirement, were several years away.
“Even after Rohit told us about the merits of equities, I did my research on MFs and stock markets. It also helped that Rohit didn’t rush us; Instead, he slowly pushed us into the stock markets because he understood my low tolerance for risk. He also sat down with us to evaluate and explain to us the hidden risks of investing in traditional insurance policies. We surrendered those plans in the next few years.”
Currently, equities make up about 36% of the couple’s investment portfolio, up from 2% in 2012, which was primarily for tax-saving purposes through Equity Linked Savings Schemes (ELSS).
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Simultaneously, the couple also increased their monthly savings to create a sufficient liquid surplus for contingencies, repay existing personal and auto loans and fund Choudhary’s business plan.
A substantial buffer allowed Chowdhary to quit his job and start his own business.
“During the transition, there were minor setbacks like paying for my property in Kolkata and medical emergencies involving my elderly parents, but we were able to comfortably overcome it with our savings,” Chowdhury said. Choudhary said.
Even today, debt and cash combined make up 39% of his portfolio.
“In the last two years of the Covid-19 phase, we were in defensive mode. They launched the second venture in early 2021, so the liquidity requirement was high. Thankfully their first business fared well and the second venture picked up pace and the couple didn’t have to dip into their savings.
dynamic investment plan
Samuel has taken a Systematic Investment Plan (SIP), but Choudhary’s investments require a more dynamic approach as his monthly income is not fixed. Whenever he has surplus from the business every 2-3 months, he puts a lump sum amount in the investment portfolio. “Since he cannot commit every month, we set an annual savings target for the couple, and through the year we ensure that the savings target is achieved,” Shah said.
Planning a lump sum investment every quarter also requires a lot more thought than investing through SIP. “Every time there is a lump sum amount for the scheme, we always review and rebalance the portfolio,” Shah said.