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"Show Me The Money"... Do You Say This Like The Nigerian Multi-Millionaire? - Outside View by PersonalFN

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"Show Me The Money"... Do You Say This Like The Nigerian Multi-Millionaire?
May 15, 2019

I have often remarked that one of the benefits of being a financial planner is the opportunity to interact with clients and absorb their words of wisdom.

Yesterday was another such opportunity when I met PersonalFN's oldest client, Mr Gyanesh Thakur (name changed) at a South Bombay club. Mr Thakur (82) has been with PersonalFN since the last 19 years and he has witnessed us falter and rise.

In the course of our discussion, Mr Thakur narrated the story of a Nigerian multi-millionaire, who even though had all the riches of the world, remarked that he had no money.

Strange, isn't it?

One day, the Nigerian gentleman asked his investment advisers where his money was. As expected, they had parked his money in shares, bonds, bank deposits, etc.

The Nigerian multi-millionaire claimed that all this was paper money and it did not bring him any joy. He instructed his advisers to redeem all his investments and then had them display the wealth in his palace. Finally, the multi-millionaire Nigerian remarked that 'Now I feel rich!'

To put in perspective, even for the richest of men, wealth is seldom enough. So if you don't feel wealthy enough, don't worry, you're not alone.

As if reading my thoughts, Mr Thakur, asked me what my idea of wealth was?

A bit hesitant; I shared the standard, buying a house, a car, a diamond necklace, lots of money in the bank, and stress-free life.

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Mr Thakur let out a sigh and remarked that he was just like me. A simple working-class man in Mumbai, making ends meet and wanting all the things I just listed (except for the diamond necklace, he preferred gold!). Soon enough he realized that achieving wealth was a lot harder than it seemed.

It wasn't just about working 10-15 hours a day (Like Mr Elon Musk!); creating wealth was a factor of both investing in good avenues with the help of an honest and an unbiased investment adviser.

He narrated his wealth creation journey to me and labelling it inspirational is still an understatement. Here's how a common man made million in Mumbai.

Mr Thakur was a conservative investor as was the norm in early 1980s-1990s, until a chance encounter with PersonalFN's representative, which altered his wealth creation journey.

Table 1: Growing wealth through bank FDs
Year Average Interest Rate (%) Monthly Investment** (Rs) Bonus Invested** (Rs) Future Value (Rs)
2000 9.00% 5,000 50,000 117,697
2001 8.00% 5,500 54,000 254,879
2002 5.13% 6,050 58,320 404,280
2003 4.63% 6,655 62,986 571,230
2004 5.38% 7,321 68,024 764,920
2005 6.25% 8,053 73,466 992,278
2006 8.25% 8,858 79,344 1,274,617
2007 8.50% 9,744 85,691 1,602,996
2008 8.38% 10,718 92,547 1,977,725
2009 6.50% 11,790 99,950 2,363,380
2010 7.00% 12,969 107,946 2,811,632
2011 8.25% 14,266 116,582 3,358,172
2012 9.25% 15,692 125,909 4,018,391
2013 9.00% 17,261 135,981 4,761,598
2014 8.75% 18,987 146,860 5,594,540
2015 8.25% 20,886 158,608 6,508,271
2016 7.15% 22,975 171,297 7,459,736
2017 6.75% 25,272 185,001 8,491,612
2018 6.50% 27,800 199,801 9,619,070
2019 6.80% 30,580 215,785 10,905,623
Total 3,436,500 2,288,098 10,905,623
**growth in monthly investment and bonus considered at 8%
(Source: RBI Website)

Assuming Mr Thakur invested Rs 5,000 per month from his savings along with a yearly investment of Rs 50,000 (bonus received), in the last 19 years, his investment of Rs 57 lakhs would be Rs 1.09 crore, i.e. a gain of a staggering Rs 51.81 lakhs.

But as I mentioned, he met us and that changed his approach to investments, thereby altering his wealth creation journey forever!

Since all his financial goals were achieved before the 2000s, the corpus he was creating was for his grandkids and therefore he was willing to go all out in equities.

Table 2: Growing wealth through mutual funds
Year Monthly Investment (Rs) Bonus Invested (Rs) Future Value (Rs)
2000 5,000 50,000 120,388
2001 5,500 54,000 266,956
2002 6,050 58,320 444,026
2003 6,655 62,986 656,559
2004 7,321 68,024 910,249
2005 8,053 73,466 1,211,623
2006 8,858 79,344 1,568,156
2007 9,744 85,691 1,988,406
2008 10,718 92,547 2,482,159
2009 11,790 99,950 3,060,604
2010 12,969 107,946 3,736,522
2011 14,266 116,582 4,524,506
2012 15,692 125,909 5,441,210
2013 17,261 135,981 6,505,625
2014 18,987 146,860 7,739,403
2015 20,886 158,608 9,167,215
2016 22,975 171,297 10,817,162
2017 25,272 185,001 12,721,235
2018 27,800 199,801 14,915,840
2019 30,580 215,785 17,442,398
Total 3,436,500 2,288,098 17,442,398
(*return on equity mutual funds assumed at 12%)

On a similar investment of Rs 57 Lakhs, Mr Thakur's portfolio today stands at Rs 1.74 Crore, a net gain of 1.17 Crore!

Of course, his portfolio had its own share of highs and lows, but he stuck to his belief and with PersonalFN.

His belief in our strategies paid off and as he often remarks, 'I don't care what the self-proclaimed investment gurus say, as long as PersonalFN handles my portfolio; I'm in fairly safe and honest hands'.

Clients like these are like therapy for us, advisers, because they make us feel a part of their wealth creation journey and seeing their wealth grow leaps and bounds, reassures us that hard work (in research) and honest and unbiased advice always pays off.

When Mr Thakur approached us, he was hesitant and why wouldn't he be, with all the rampant mis-selling and unethical advisors at every nook and corner of the country. But, at PersonalFN, under the guidance of our founder, Mr Ajit Dayal, we stand tall in our honest and ethical approach towards managing our client's hard-earned money.

Woody Allen (American actor and director) famously said, 'Money is better than poverty, if only for financial reasons'.

Or as the Nigerian multi-millionaire would say, 'Show me the money!'

If you too are starting your wealth creation journey or have already started, ensure you invest prudently in two basic aspects: An honest adviser and honest advice. If you haven't found them yet, look no further and reach out to us & be rest assured that PersonalFN will take the utmost care of you and your financial aspirations.

As pioneers in the 'Wealth creation & Wealth Advisory' space for nearly two decades, our experience has helped us acquire diverse knowledge and expertise in handling an individual's financial insecurities, goals, and aspirations.

If you wish to enlist our experience of two decades to grow your wealth, get in touch with PersonalFN's Certified Financial Planners on 022-61361200 or write to info@personalfn.com.You may also fill in this form, and soon our experienced financial planners will reach out to you.

PS: If you want to build wealth for your future.

Subscribe to PersonalFN's premium mutual fund research service - FundSelect Plus!

It focuses on new-age investment strategies, instead of mere portfolios. Whether you are looking for fast investment gains or looking for a long-term retirement plan, these Investment Strategies is probably what you need.

Click here to get it instantly as a FundSelect Plus subscriber!

Author: Deepika Khude

This article first appeared on PersonalFN here.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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