For quite some time now, I’ve had people call me up and ask for my opinion on this or that Mutual Fund. Many times, I’ve spent time with investors and patiently explained how and why they should invest in a particular fund or other investments.
Though I have studied the topic a lot, I was rather wary of recommending MFs to retirees. The stakes are simply too high to get it wrong. That was until Mr.Gupta, one of our real estate clients, got talking to me and decided to come in for a consultation.
He had gone to a rather famous financial planning firm (very well known and owner regularly comes on TV) and paid nearly Rs.40,000 for a plan. Actually, I admired Mr.Gupta for doing that – how many people even go to a financial planner or ask for some help with their finances?
I went through what was suggested for him and it was the usual culprits – Senior Citizen Savings Scheme, Bond funds, etc but the most intriguing was the suggestion to invest a large chunk of money, nearly 40% in a Fund of Funds! A fund of funds actually invests in other funds – I’d never recommend it to anyone simply because, the investor loses about 1 to 1.5% of additional charges that the FOF levies in addition to the charges of the funds that it invests in.
We sat together and I explained that I would divide his money into 3 parts – 1. Absolutely safe – enough invested here to cover all his usual expenses. 2. Slightly risky – to boost his net worth a bit so he could take vacations, etc. 3. High risk funds – with money that he wouldn’t miss even if it drops 50%, but with the likelihood of great returns.
We spoke and agreed on the funds and more importantly, he understood the reason why he should invest in those particular funds.
After that, he took the list and showed it to the relationship manager at his bank. It seems he agreed with the list, but recommended one more addition – a ULIP policy because returns under an insurance plan are tax free! Talk about mis-selling!
This is the first time I asked for and got a testimonial, which I am rather proud of. Here it is:
I am Ashok Kumar Gupta, retired from BPCL in the rank of Chief General Manager. Like any other pensioner, I got my retirement benefits from my company. Whatever savings I had in my bank account during my service, was kept in savings and some FD’s. I had no other kinds of investments, neither the knowledge nor the inclination to look at my finances, beyond these. I expected some lump sum money on my retirement. I engaged a financial planner to guide me professionally. He advised me to collate lots of data pertaining to my aspirations, documentation of my money, and how I intend to invest my money. I met him thrice with my wife, where these issues were discussed. Finally, he gave me a booklet containing the details I had provided him with, his analysis, and recommendations. He advised me to put some money in FD’s and three-four mutual funds. He didn’t explain the rationale of investing in the mutual funds he had recommended. However, he told me to be in touch with him and advise any changes in my financial parameters so that he can advise me for one year.
I happened to contact Mr. Niranjan Bangera, in relation to a property transaction. I know him as a property consultant. He told me that he has a passion for mutual funds and likes to guide people like me on the investment plans. I met him twice and he did the following-
- He spent two hours with me in our first meeting. He made a comprehensive plan with my retirement funds and my savings. His plan includes flow of money to meet my monthly household expenditure.
- He divided the money into fixed deposits and senior citizens saving schemes
- Mutual funds with low risk like balanced funds which invest in both debt and equity
- Mutual funds with little high risk which invest in equity
- He also gave me expected return on each of these investments and approximately how much I can invest in each of these assets. This helped me in working out the weighted average rate of return on my total investments planned.
- Mr. Bangera also advised me to invest in mutual funds in the direct plan and not regular plan.
- Regular plans are operated by banks for which they charge around 1% of your investments every year. If you invest through direct plan, this 1% expenditure will come to you, enhancing your growth or return.
- He also advised to go for growth and not the dividend option, so that you get the benefit of compounding.
- He advised to review these investments once in six months and may make small changes if performance of a particular mutual fund is not good. Otherwise one can stick to the investment plan for ten to fifteen years.
- He also advised me that I don’t have to pay any taxes unless I withdraw the money from these mutual funds.
- He also advised me that he is a distributor of some mutual funds and if I invest through him, he’ll get a commission. Therefore, I should invest in the direct plan, as mentioned above.
- He opened the value research site and showed me the risk profile of each of the mutual fund he has recommended. He also explained to me the pros and cons of large cap, mid cap, small cap.
- Mr. Bangera also worked out my tax liability.
I am really grateful to him for making me financially wise and guiding me properly. Most of us spend our lives earning money but don’t know how to invest and grow the same. This is especially true of all the retirees from PSU’s and government jobs. Incidentally he writes on a site “financially stupid”. I have read his articles. These are very easy to understand and as he has explained these in a layman’s language. Most of the banks and other financial institutes, whom I have met, use financial jargons.
View above, I highly recommend to all investors that they approach Mr. Niranjan Bangera and seek his guidance. He will make a plan which is most suitable to you and also tell you how to implement the same. His views are unbiased, crisp and to the point and in your best interest. I am thankful to Mr. Bangera for helping me and wish him a great success in pursuing his passion of helping people become better investors.
Ashok Kumar Gupta