An investor's journey from real estate to SIPs

Hailing from Sompeta, a small town in Andhra Pradesh, Sagar Epari, an engineer, lives in Muscat, Oman, with his wife and a four-year-old son. However, his heart is grounded in his hometown, where most of his family members live. His mother is a homemaker, while his father and brother run a small grocery shop there.

Born and brought up in a lower-middle-class family, he grew up seeing his parents managing money carefully. Nevertheless, his father never compromised on the education of both Sagar and his brother. He reminisces, "I had to relocate for my post-graduation, which was quite an expensive affair. However, my father happily supported my decision. It made me more responsible about spending money during my college days."

Once he started his professional journey in 2007, Sagar tried to spend as little as possible so that he could support his family. Since he wanted to save a large part of his income, this compelled him to explore opportunities abroad, specifically in the Middle East. In 2010, he got a job in the Middle East with a reputed oil-and-gas firm. He started earning handsomely and by 2012 repaid the entire debt taken for the construction of his house in Sompeta. Thereafter, he started to give investing a serious thought.

Sceptical of the stock market, he limited his first investments to fixed deposits, recurring deposits and unit-linked insurance. However, since his savings were on the higher side, he started looking for other investment options. His search brought him to the world of land and buildings. Since many of his friends profited from investing in real estate, he made a foray into real-estate investing as well. However, this move proved to be disastrous for him. Obviously, losing money in real estate would be a major disappointment for anyone who used to save money in a small box during his school days.

Sagar learnt a lesson and started charting his own path. In 2016, he decided to put his faith in equity markets after being introduced to mutual funds by one of his friends, a part-time mutual fund advisor. He recalls, "My friend guided me to take one step at a time and first understand the concept of mutual funds. Soon, I started with my first SIP of Rs 10,000 and spread it across regular plans of four different funds, as recommended by my friend."

Although confident about the chosen investment route and asset class, Sagar was caught amidst the flashes of rising markets in 2017. With surplus cash, the bull run of 2017 lured him to invest lump sums. "Seeing the excellent fund performance in the bull market of 2017, I found the SIP process to be very slow and wanted to capitalise on the opportunity. So, I started investing lump sums, which obviously worked very well during that time. However, the market conditions changed and the same strategy failed miserably in 2018," he recalls sadly.

Coming across Value Research changed his investment outlook. Realising the importance of spreading one's investments over a period of time, Sagar started valuing SIPs. Like many others, earlier he used to invest without any goals and in as many funds as he pleased. With the initial guidance from his friend and Value Research, he understood the importance of financial planning, the ill effects of considering real estate as an investment, the benefits of direct plans and the significance of term insurance.

Describing the Value Research website as a marvellous resource, Sagar says, "I cannot exactly remember how I came across the Value Research website, but it has been a life-changing experience in terms of taking care of my investments and understanding the concepts of financial planning. The columns, articles, fund ratings, detailed information of individual companies, etc., have encouraged me a lot all through my journey. It was this enthusiasm that led me to subscribe to Wealth Insight, Mutual Fund Insight and Value Research Stock Advisor."

Sagar now has a term plan of Rs 1 crore. He also understands the significance of buying a personal health cover in addition to the one provided by the employer. Therefore, he is planning to buy a family health cover of Rs 25 lakh. He has stopped all his lump-sum investments and moved a major part of his corpus to direct schemes. He is also planning to transfer the remaining part after assessing the effect of taxation.

He also maps his investments to his goals and likes to invest in multi-cap funds (now flexi-cap). "After reading Dhirendra Kumar's columns, I was convinced that from a long-term perspective, multi-cap funds were the best option in terms of flexibility of investing in companies across market capitalisation. I also realised that volatility in multi-cap funds is less as compared to that of mid- and small-cap funds. Thus, multi-cap funds help counter a bear market with less anxiety."

Smitten by the power of compounding, Sagar Epari now swears by equity investments. He has accumulated Rs 25 lakh for the wedding and education of his child. He also wants to buy a house and has accumulated Rs 20 lakh for it so far. For his retirement, he has Rs 70 lakh in today's terms. Here is how he manages his investments:

• To deal with any unprecedented emergencies, he has Rs 5 lakh in liquid funds and savings bank account.
• For goals less than five years away, he invests in fixed and recurring deposits as the interest from them is tax-free for NRIs.
• He also invests through Kotak PMS services. He has earmarked this fund for his son's wedding and education. He chose it only after considering its past track record and found it in line with his multi-cap approach. He plans to add another Rs 25 lakh towards the same by selling one of his previously bought plots. He regularly monitors his portfolio.
• Sagar does his own stock research in line with the principles of Value Research Stock Advisor and finds it to be a great learning process. His portfolio currently has an annualised return of 12 per cent. In 10 years, he plans to accumulate Rs 1 crore through his stock investments for buying a house.
• Sagar's retirement basket comprises funds across categories. He currently invests Rs 25,000 per month in six schemes, namely Motilal Oswal Multicap 35 Fund (now Motilal Oswal Flexi Cap Fund), Kotak Standard Multicap Fund (now Kotak Flexicap Fund), L&T Midcap Fund, Franklin India Smaller Companies Fund , HDFC Hybrid Equity Fund and Motilal Oswal NASDAQ 100 FOF. He is also in the process of consolidating his portfolio and is moving the funds in other schemes to these six schemes. He aims to accumulate Rs 2 crore for his retirement.

Sagar is moving systematically towards his financial goals. Currently, his investment journey may still be a work in progress, but he is confident that he is on the right track. "I feel I am in a good position in terms of my investments. I am hopeful that by God's grace, I will achieve my goals step by step. And if His will prevails, I may even take early retirement and focus on personal development," he signs off.

This story first appeared in the May 2019 issue of Mutual Fund Insight.

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