Recently an IFA had a crisis on his hands. Calling it a crisis is wrong, but it sounded like that in his head. This man with some health problems – aged 57- had an equity portfolio of Rs. 4 crores, a rental income of Rs. 20L, and cash of Rs. 4 crores – got from past income and interest on bank fixed deposits.

So this IFA put Rs. 2 crores in a debt fund with 4 years duration, Rs. 1 crore in an ultra short bond fund and Rs.1 crore in a fund with about 65% in DEBT and 35% in equity. The IFA was told that the 3rd fund (pension fund) should be NOT TOUCHED till his age of 65 years and from that he should take a pension of Rs. 1L per month for the rest of his life.

I was not in the picture when the transaction happened. Suddenly the client (investor) wanted to remove ALL THE MONEY from all the mutual funds and put it in another flat. No clue what changed,

Lets look at it from the IFA’s point of view. He met the client 3 times and confirmed that he will not need the money for a few years. Hence the choice of a longer term debt fund, and a small portion (35L in a total of 4 crores in equity). Completely right. He came to me now asking me about what to do..

I realised the need for a ‘Goal Based Investing’. A 57 year old man should have a clearer focus about what he wants to do with money. What can be done now? Literally nothing can be done. Too late.

He should have had a far better focus…