It Pays To Stay Invested In Equity
Dr. DG Vijay, 54 years, is a senior oncoplastic breast surgeon at HCG Cancer Centre, Ahmedabad. His wife, Dr. Swati Devanhally, works in the Department of Ophthalmology at BJ Medical College, and they are blessed with two sons, Shirdhar (27) and Shravan (23). Despite his busy schedule, Dr. Vijay has stayed focused on adopting a consistent investment strategy to fulfill his financial aspirations. He met Sajni of Wealth First Portfolio Managers around 12 years ago, just when the Global Financial Crisis struck the markets, and the fall of Lehman Brothers had turned sentiments bearish.
As the first step to financial planning, discussions were held with Dr. Vijay to outline his financial goals and monthly savings cushion. The financial plan was crafted, considering both his investment horizon and risk appetite. Surprisingly, despite the negativity, Dr. Vijay was comfortable investing in equity, as his financial goals were primarily long-term, centered around his children and retirement planning. He understood the benefits of professionally managed investments and the power of compounding. An initial monthly SIP of ₹50,000 was registered in August 2008 for long-term wealth creation, disciplined savings, and professionally managed investments.
It was also planned that, instead of focusing on market movements, the investment portfolio would be reviewed on an annual basis. Additionally, to enhance his savings and financial goals, it was advised that Dr. Vijay keep all funds invested in equity funds that were not needed in the near term (around three years). Given the recent market correction, his return expectations from equity fund investments ranged between 15 to 18 percent.
Disclaimer
Financial Planning of Dr. DG Vijay is based on the “personal opinion and experience” of Sajni Aalok Patel
and that it should not be considered professional financial investment advice. No one should make any investment decision without first
consulting his or her own financial advisor and conducting his or her own research and due diligence.
However, a lot was waiting to unfold in the coming years. The markets remained volatile over the next three to four years. At the end of three years, the portfolio’s XIRR was 8.34 percent, which further dipped to 7.50 percent the following year. This underperformance, compared to his return expectations, risked shaking his confidence in equity investments. There was a point when he questioned his decision to continue the SIP. This period tested Sajni’s role as his financial advisor to the core. Yet, she always took the time to patiently listen to Dr. Vijay’s concerns, advising him to ignore market noise and stay patient with his investments. Torn between continuing and redeeming, Dr. Vijay chose to persist with his SIPs, and in time, his investments began to yield results.
Investment performance improved steadily, with a 23 percent XIRR over five years, rising to 27 percent over six years. As his practice flourished, his confidence in his investment strategy grew. He began increasing his monthly SIP amount and made additional investments whenever he had an investible surplus. His family’s monthly SIP has grown significantly from the initial ₹50,000 in 2008. Despite substantial market corrections in 2018 and the recent COVID-19 outbreak, his regular savings continue to reflect 8 percent annualized returns. Given a total equity investment of ₹100 over the period, his portfolio is currently valued at ₹195, in addition to a ₹30 dividend payout over the same timeframe.
His consistent savings have enabled him to achieve several of his aspirations. Over the past decade and more, he has met life
Dr. Vijay has been able to fulfill significant goals, including his sons’ higher education and one son’s marriage. With the security of financial savings, he has also been able to take his family on annual vacations, allowing him to spend quality time with them amidst his busy schedule. This is why he fondly refers to Sajni as his “lifestyle advisor,” rather than just his financial advisor.
As the country continues to battle the ongoing coronavirus outbreak, COVID warriors like Dr. Vijay are at the forefront of this crisis. While staying safe and maintaining good health is essential, it’s also crucial for everyone to remain committed to their financial plans and keep their investment portfolios healthy.