How to match investments with life goals

THE WEEK-Aditya Birla Sun Life AMC seminar was held in Kottayam, Kerala

59-Sandeep-S Focused Investment: (From left) ABSL AMC’s Sandeep S. and financial expert Rajesh Krishnamoorthy listening to ABSL AMC’s K.S. Rao.

THE HALL AT Hotel Aida in Kottayam was packed when K.S. Rao―executive vice president and head of investor education at Aditya Birla Sun Life AMC Ltd (ABSLAMC)―rose to greet residents of the city of lakes, letters and latex. Earlier in the day, Rao was at the Saintgits group of educational institutions to present ABSLAMC’s flagship training programme for students―My First Paycheque.

At the Aida, the crowd was a mix of seasoned investors and beginners. As always, ABSL brought a stellar panel to Kottayam, and in the lead was Rao, ably supported by Sandeep S., regional head of ABSL AMC Ltd (Kerala) and Rajesh Krishnamoorthy, an independent director, financial expert and former country head of the Financial Planning Standards Board Ltd. The theme: Life Goal Planning with Mutual Funds.

After Rao’s detailed presentation on money management, Krishnamoorthy led the discussion by defining life goals and financial goals. “They are not the same,” he said, “but they are so intimately connected to each other that people mistake one for the other.” Sandeep followed up by outlining goal-based investment in general, and then tying it to mutual funds specifically. “The idea is to match a goal and a timeline to an avenue of investing,” he said. “Once the goal is clear, the timeline offers itself. With these two facts in front of us, it becomes easier to choose whether we need to board an autorickshaw, a bus or a plane to get to our destination.”

Rao then spoke in detail about retirement planning using mutual funds and about the need to start early to build a corpus. The discussion led to SWPs and how the mutual fund world was an alphabet soup! Sandeep decoded the more obvious ones, beginning with SWPs.

“An SWP, or systematic withdrawal plan, is a mutual fund investment plan, through which investors can withdraw fixed amounts at regular intervals,” he said, adding that it often was used for tax planning. The next abbreviation that came up was STP, or the systematic transfer plan. Krishnamoorthy and Rao discussed how investors often used it to shift resources from one scheme to another to maximise gains and to safeguard the corpus during market fluctuations. Sandeep also touched upon the Har Ghar SIP initiative to popularise mutual funds among investors.

The importance of wills and nominations came up next, with the audience pitching in with questions and opinions. Krishnamoorthy elaborated on the topic, and the crowd was in splits when Rao quipped that writing a will was not a death wish, but mere common sense!

Naturally, the volatility of the markets came up for discussion when the floor was opened to the audience for a question-and-answer session. The panellists reassured the audience that the Securities and Exchange Board of India is a very capable watchdog of the industry. The high tea that followed saw many delegates grabbing the panellists for a quick chat to clear doubts and gain insight into personal situations.