No more real estate and gold for us

Photo by Pradeep Gaur/Mint

Starting your own company is often fraught with uncertainties and Shilpa and Vikram Grover faced their share of difficulties. Over their 15 years of working, the couple had various investments that they wanted to liquidate to start their law firm. “This was when we realized that our investments were not liquid. We didn’t have cash to build the office (they had the land),” said Shilpa. A big reason for this was that their investments were mostly in real estate and gold. “We didn’t know much about mutual funds or shares,” she said. “There was general confusion about low returns on investments, high interest on credit, inadequate savings…” added Vikram. A lot of this has now changed, thanks to a suitable financial plan.

Fixing the plan

The reason why a lot of their investments were in real estate is that Shilpa’s father and brother are in this business. But considering the depressed real estate market, especially in the Delhi NCR region, these investments did not yield the expected returns. The couple is now in the process of liquidating some of their real estate assets. “We have asked a few agents to sell our properties,” said Shilpa. They have built their law firm’s office in Gurgaon and rented out the top two floors.

Apart from this, the couple’s portfolio was also burdened with 15-20 life insurance policies, sold to them by a family friend. “We didn’t know what they were, and what to do with them…. They were just rubbish,” said Shilpa. Their health and life insurance cover has now been enhanced.

They also had sizable gold investments, bought mostly from banks. “We will liquidate this as and when required,” said Shilpa, adding that they no longer invest in gold. “We are considering the Gold Monetisation Scheme,” she said.

Since they first consulted with Amit Kukreja 2 years ago, their finances have been categorised and have become more goal oriented. “A lot of people don’t go to a doctor and self-medicate. If there is an expert in an area, consultation will do no harm,” said Vikram.

After the asset re-distribution, they now plan to fund their 13-year-old daughter’s higher education, in about 5 years, with mutual fund investments. Among their more near-term goals is to buy a bigger car.

The Grovers have had to take some tough decisions. Vikram, for instance, had to share financial details with an ‘outsider’. “I had to open up to an expert. I was reluctant to discuss financials openly and disclosures were tough. I guess any discussion on pain points is always difficult,” he said.

They also had to decide about letting go of some real estate. “My father had gifted me some land. I am emotionally attached to it,” said Shilpa. But they have learnt their lessons and are trying to be prudent with their money. “We have come to know a lot. One, not to invest more in gold. Two, not to invest anymore in real estate. Three, start mutual funds,” said Shilpa. There was realization on several counts. “I feel that I have some direction now and I am trying to get into the habit of goal-based financial planning,” said Vikram.

He has also postponed his plan to retire. “We will think about it later,” said Shilpa.

Looking ahead

The jolt that Shilpa and Vikram received when they realised they did not have enough liquidity when they needed it most, has been a blessing in disguise. It forced them to reconsider their choices and get expert help.

With an appropriate financial plan in place, they feel they are in a better position now to meet their planned and even unplanned goals. “We were really late in understanding…. Had we started earlier, we would have a better portfolio. We were shocked that we had been slow in understanding the markets. We made a lot of dead investments. But we feel secure now,” said Shilpa.