What Lifestyle Stagnation Is – And How Technicians Overcame It

Bangalore-based tech expert Krishna Rao, 49, realized this while budgeting for a car purchase. The amount he allocated for this purchase ended up being nearly 60% less than he spent to own the larger vehicle. So what has changed? “Old habits are hard to break,” says Rao.

“I instinctively stuck to a conservative budget. changed my mind. Gaining this clarity gave me a better understanding of what I could and could not do,” says Rao.

Advice from financial advisors to Ram Kalyan Medury, founder and CEO of Jama Wealth, a Sebi-registered investment advisory firm, also helped. “My job as an advisor is also to show people that certain possibilities are within reach without jeopardizing their financial goals,” Medury said. So why not spend a few hundred thousand more to buy a bigger car so he can enjoy his hard earned money and make good memories with his family. I can afford it. ”

In fact, Rao’s primary accomplishment with working with a professional advisor is getting clarity on his financial situation and understanding how to make money work for his financial goals and aspirations. Mint spoke to Rao and his Medury, his financial guide for three years, to understand his personal finance journey.

Show full image

the power of equity

Spending within your means and saving for your family’s future has always come naturally to Rao. What he lacked was a focused approach to investing. “All my surplus savings went into bank deposits and I didn’t earn much,” Rao said.

Until 2019, his investment portfolio leaned heavily towards traditional liability products including term deposits, traditional insurance plans and Ulips (unit-linked insurance plans). Although he had considerable savings, he did not have a well-defined emergency corpus and all his savings were wasted. “At this point, I realized I needed a plan,” says Rao.

you probably like it too

Top B Schools Do Startup Background Checks

Decrypting Crypto Routes for Money Laundering

Mint Explainer: Will the world allow nuclear weapons to fail?

What Lifestyle Stagnation Is – And How Technicians Overcame It

As a first step, Rao enlisted the help of Medury to compartmentalize existing savings and allocate them to different goals. As part of the realignment, Rao terminated several inefficient insurance plans. The exercise gives Rao the clarity and confidence to tackle other short-term ambitious goals, such as upgrading to a luxury car or buying a small plot of land to pursue his hobby, organic farming. I was able to.

Over the past three years, his overall equity exposure has increased from 4% to 40%, the majority of which is direct equities. “His stock portfolio nearly doubled over this period,” Medury noted. Our equity portfolio consists of portfolios focused on large- and mid-cap stocks,” Medury said.

When asked how Rao has adapted to this massive increase in equity exposure, Medury said it has not been easy. “Most of his goals are years away, so he had a high risk capacity but a low appetite. I wonder how inflation will affect all other investment vehicles. and equities alone will help him accumulate wealth.Exposure.

But investing directly in stocks can stump even the most seasoned investor if the market crashes, and Rao was no exception. For example, in March 2020, when he first started investing directly in equities, Rao’s portfolio took a big hit and slipped into the red, he said. “I was worried, but Ram advised me to stay grounded, saying volatility is part of investing in the stock market.”

This was also the time Rao lost his job as a result of the economic uncertainty caused by Covid. But having a good emergency corpus gave him the financial cushion to get through it. “There was no financial setback because the emergency corpus took care of the cash flow.

Rao has adequate life and health insurance. One purchased from his employer and one personally, double his gross annual income. He no longer has traditional life insurance.he has total health insurance ¥Rs 120,000 from insurance provided by his employer in addition to independent health insurance.

Elsewhere in Mint

In Opinion, Dani Rodrik writes about a new economic policy paradigm. replace neoliberalismAnoop Singh explains 6 monthly indicators of recessionDebjani Ghosh explains why India is strategically center of innovation Of the world.how to tell a long story Rival closes in About India’s second largest automaker.

first article