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Trust Your Financial Plans, Keep Your Fear At Bay

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Trust Your Financial Plans, Keep Your Fear At Bay
Zian Khan - 02 August 2021

Dr Nitin Vaidya, 47 years and his wife Dr Vidya Vaidya, are senior dental surgeons practicing independently in Durg, Chhattisgarh, for 18 years.

Vaidya came across Omega Financial, a financial advisory, in 2010 when his aim was to secure a corpus for the higher education and marriage of his children, Rishabh and Ishan, and attaining financial independence with prudent retirement planning for him.

Zian Khan, Managing Partner, Omega Financial, recalls his first interaction with Vaidya, “Vaidya proved himself to be an informed investor by commencing with financial planning as prima facie in 2010. In the first 30 minutes, we could easily discern that the investor is aware of the basic financial concepts like compounding, inflationary cost, and how risk-adjusted returns should be mandatorily balanced and a perfect allocation to be created to achieve the financial goals in his life.” Vaidya shared his concerns and aspirations with Omega over a series of interactions before a clear financial plan was chalked out. Being an informed investor, he posed sufficient trust and confidence in his advisors. While a conservative financial plan required around `33,000 of regular investments through Systematic Investment Plans (SIP) in equity funds, the plan was to start immediately even if the current income supports lower investments. Vaidya shares, “the investing journey was initiated with `10,000 monthly SIP in equity funds with a commitment to increase the investments with SIP top-up as and when possible.”

As the discussions and interactions progressed after onboarding Vaidya on the wealth creation journey, Omega Financial also considered filling the void of life insurance policies and health insurance policies to make the financial plan more comprehensive. While in 2013, a life insurance policy was also taken based on the human life value, it was again modified and increased to match his human life value in the year 2019. A periodic review of such insurance coverage also ensured that his future aspirations and dependents continued to stay protected in any life contingencies. Further, being a doctor himself, it was not a challenging task to explain to him the medical expenses that go behind a treatment. As such, the health insurance coverage plan was also added to his portfolio.

Vaidya is also to be complimented for the sheer conviction to continue investing across periods of deep correction. With almost 11 years of investment experience, he faced several market-shaking events, which tested the true character of a long-term investor. He has continued to stay invested and increase his SIPs as his cash flows and investible surplus improved. As of date, his monthly investments have reached the six-digit figure of `1 lakh, and his total absolute investment is growing at a robust pace of 15 per cent CAGR year on year since inception till date.

The wealth creation journey is that fruit whose sweetness can be felt with patience and trust. Vaidya has reaped the fruits of financial prosperity with his deep trust towards his investment conviction and Omega Financial as his trustworthy advisor. While Vaidya helps his patients to have a blistering smile through his profession, today, he is also smiling while foreseeing his financial goals getting achieved at an earlier stage than envisaged.

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Vaidya sums up his wealth creation journey

1. Periodic Review of the Portfolio is Essential: A periodic review of the investment portfolio helps keep the portfolio healthy.  Omega Financial has a regular model of reviewing the portfolios, and a similar review was also conducted in a biyearly pattern with Vaidya. This helped identify the underperforming schemes and replace them with the better performing ones. The portfolio quality also evolved according to the changes and modifications in the financial goals and assumptions.

2. Investing through Market Corrections: Vaidya recalls, “Sometimes, it was tough to continue investing when the portfolio was trending down incessantly. However, Zian and his team always heard my concerns and came out with practical advice and suggestions. Sometimes, such suggestions included realigning the asset mix or adjusting the portfolio risk profile. However, one suggestion was always universal in such talks – don’t stop your SIPs.” When the markets are down, the SIP investments provide a higher number of mutual fund units than those invested at higher valuations. This helps lower the overall investment cost and effectively helps to push the returns higher once the markets bounce back. If one stops investing at lower levels, the benefit of investing at lower valuations cannot be utilised by the investor.

3. Have a Financial Plan: When there is a financial plan in place, it always keeps the investor motivated to continue investing towards specified aspirations. Further, it also helps in keeping the emotional biases (like greed, fear) away from the investing journey. If the financial goals are still some time away, the short-term market movements may not impact the investor psychologically. Further, linking the investments with specific goals can help the investors choose suitable mutual fund schemes aligned with the financial goal and investment horizon.

4. Have Faith in Your Financial Advisor: Zian once shared with Vaidya, “Carving and weathering are kind of similar processes, but shape acquires in the first one. Omega Financial believes in carving, as the idol which is worshipped is shaped by carving, not weathering.” The role of financial advisors is always crucial to the success of the plan. Owing to their relative experience across market cycles and different investors, they can be the best person to provide suitable guidance that aligns with the investment strategy and risk profile. One should always have faith and trust in their financial advisor, for they can be the anchor in an investor’s investment journey. This can be instrumental, especially when the investors think that their ship is sinking with the correcting markets.


Disclaimer

Financial Planning of Dr Nitin Vaidya and Dr Vidya Vaidya is based on the “personal opinion and experience” of Zian Khan, Managing Partner, Omega Financial. It should not be considered professional financial investment advice. No one should make any investment decision without first consulting their advisor and conducting research and due diligence.

Zian Khan, Managing Partner, Omega Financial

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