From a modest start to 10x SIP growth: A 32-year-old’s financial journey

Jadhav started her investment journey in 2015 when she was only 23. She lost her father while still in college. Her mother was a homemaker. She and her brother had to take care of household expenses. Despite financial constraints, Jadhav managed to spare a few thousand to invest in the initial days. Nine years on, she increased her monthly investment ten times.

Beginning the investment journey

One of her relatives introduced her to NS Wealth Solution, a Sebi-registered investment advisor (RIA). “They charged me ₹7,000-8,000 a year for advisory services,” she said. After analysing her income and expenses, the advisor suggested mutual fund schemes for investments. “I did that with just a couple of thousands initially. I also had my father’s life insurance amount parked in fixed deposits. On their suggestion, I deployed it in mutual funds for better returns,” said Jadhav.

As far as returns are concerned, her portfolio, which includes equity and debt instruments, has given a compound annual growth rate (CAGR) of 21% since inception. The debt portion has earned a CAGR of 18%, while the equity portion stood at 16%.

Financial security is paramount

Jadhav’s family could have faced a tough time had it not been for her father’s saving habit. “We could manage it on our own, thanks to my father’s investments. He inculcated a savings habit in us. I was determined to save and invest from the day I started earning,” she said.

Many of her friends spend half of their salary on EMIs. “I cannot do it. I need financial security. They are not thinking about retirement. They have no idea about direct or regular funds or why the National Pension System (NPS) is important,” she added.

Jadhav invested in a combination of MF schemes, diversifying her investments in large-cap, hybrid, flexi, and liquid funds. For tax planning, she bought equity-linked savings schemes (ELSS). She has also invested in 12 MF schemes.

“It may look like a cluttered portfolio, but we follow a strategy to maximise portfolio returns. We do quartile analysis on a quarterly basis to review the positioning of where our recommended funds stand,” said Nagraj Fakira Pawar, senior financial planner at NS Wealth.

Quartile analysis is based on ranking all MF schemes in four parts in terms of performance, cost and valuations separately. Schemes that remain in the top quartile are considered consistent performers.

“Incremental SIP amount goes into two of top five funds of first quartile. We do not immediately exit from existing funds. We do it only when they fall to the bottom quartile or a better opportunity comes along. So while there are 12 MF schemes in her portfolio, fresh investment is not happening in all of them,” said Pawar.

Jadhav also ventured into equity investment when the stock market crashed in March 2020. Many fundamentally strong companies were available at attractive valuations then. NS Wealth created a stock portfolio for its clients around that time. The firm has, however, discontinued the stock advisory and is moving it to aPMS or portfolio management service if clients so wish or deploying it back in mutual funds. Pratibha decided to go ahead with the PMS. “We have recommended her a PMS as per her risk appetite,” said Pawar. 

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Insurance cover

Jadhav’s employer covers her for a mediclaim of ₹5 lakh. They also provide a personal accident policy with a cover of ₹44.46 lakh. She has an employer-provided group life insurance plan with the same coverage. On NS Wealth’s advice, she has bought a term cover of ₹1 crore privately at an annual premium of ₹11,237.

Since she is already covered by the employer, NS Wealth has advised her to get a super top-up plan of ₹25 lakh coverage with ₹5 lakh deductible.

Deductible is the amount that a policyholder herself pays before the super top-up policy kicks in.

Jadhav’s employer’s medical policy can take care of the deductible. However, if she loses her job and gets hospitalised, ₹25 lakh cover will kick in only after she has paid ₹5 lakh by herself.

“Liquidity is important in her case. We advised her to top up her ₹5 lakh mediclaim with ₹25 lakh super top-up so that she does not have to pay premium for the individual base policy,” said Unnati Rajesh Fulfagar, associate financial planner at NS Wealth.

“If she decides to switch jobs or take a break between two jobs, we will advise her to buy an individual health plan. If she gets married in the meantime, she can take a family floater plan with her husband,” Fulfagar said.

Jadhav has also bought an individual health plan for her mother, which covers ₹7.5 lakh. She pays ₹28,303 annual premium for her super top-up and mother’s health plan.

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Long-term goals

Jadhav has been consistent in her investments. She keeps funds equivalent to a two-month salary in her savings bank account, and the rest goes into investments and expenses. Her emergency funds are kept in liquid funds and FDs. She aimed to accumulate funds for her marriage, which she has already achieved. Her next goal is to collect funds for the down payment on a home purchase. She is investing for her retirement as well.

“These two goals have been mapped together in long-term funds, 75% of which in future value has been achieved,” said Fulfagar. 

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Advisory charges

NS Wealth offers her tax advisory along with ITR (income tax return) filing. Regarding advisory charges, Jadhav said it has moved to an AUA or assets under an advisory-based model from a fixed-fee one.

“It is 1% of my assets under advisory,” she said. The charges for PMS are separate. “I pay 2% of the value of my stock portfolio annually as a fee. 1% each goes to NS Wealth and the PMS provider,” she said.

Fulfagar said clients are charged a ₹40,000 annual fee when they are onboarded by the firm. “From second year onwards it moves to 1% of AUA,” she said.

As Jadhav prepares for her marriage, she remains committed to her investment discipline. “If my future husband has an advisor, we’ll align our goals but keep investments separate. If not, I’ll introduce him to NS Wealth,” she concluded.