The Power of Planning | Value Research Thavva Subramanyam's investment journey emphasises on the importance of goal based planning and investing
How I Did It

The Power of Planning

Thavva Subramanyam's investment journey emphasises on the importance of goal based planning and investing

Born and brought up in Andhra Pradesh, Thavva Subramanyam is a great fan of cricket so much so that he even did commentary for matches during his college days. With machine designing as his specialization, Subramanyam completed his Masters in Technology from the prestigious IIT-Guwahati. Currently working as a Project Manager with a reputed MNC in Hyderabad, he started his career as a lecturer in one of the engineering colleges and even worked as a Design Engineer for a brief period with a company in Malaysia.

Thavva, third among the four siblings, wasn't born with a silver spoon. "My father had a small road side idli shop and therefore we were never able to study in private schools or colleges," he says. But he didn't let his modest upbringing affect his studies. He was a school topper in 10th standard and held second position in his diploma in Mechanical Engineering. Since money was not plenty when he grew up, he understands the value of every rupee and making money earn more money.

During his childhood, his family faced a lot of financial hardships due to the ill-health of his father. Revisiting those days, he says, "In those times of difficulties, my younger brother became my friend and elder brother, my second father as he took control of the entire family." For a period as long as six years, Subramanyam along with his brother's spent a major portion of income on clearing the inherited debts. After fulfilling his duties towards his family, in 2007 Thavva married his long time partner, Manjula. After their marriage he trained her in similar area of expertise and she also went on to joining one of the reputed MNC's.

With both of them earning reasonably well, Thavva and Manjula started looking for different investment vehicles in order to save for their future. He mentions, "Friends and colleagues brought in suggestions like LIC policy, Chit funds and Recurring Deposits. At this critical juncture, VRO and the columns written by Dhirendra Kumar in Telegu news daily Sakshi helped me to understand the benefits of investing in equity through mutual funds."

Calling VRO as his dream place, he enjoys every second spent on reading and understanding Dhirendra Kumar's 'First Page' articles and 'Ask Value Research' questions. Recollecting his introduction to mutual funds, Thavva says, "While traveling to London on one of my business trips in 2009, I saw a copy of Mutual Fund Insight kept in my seat's pocket. I immediately started reading it, first due to sheer boredom and later due to the impact the magazine had created just within minutes of reading it." By the time he landed at the London airport, he was all excited about the mutual funds knowledge box that he had just built.

After coming back from UK a month later, he started investing based on VRO ratings in four funds - HDFC Top 200 Fund (Now HDFC Top 100 Fund), Aditya Birla Sun Life Frontline Equity Fund, among others. At this point he had a total savings of Rs. 1 lakh. Fearing that he would spend his capital on useless expenses, Thavva invested Rs. 25,000 each in these funds as lump sum. However, in order to achieve their future goals, Thavva and his wife used their surplus salary to start SIPs of Rs. 2500 each in the same funds. He proudly claims that, "Since then we've never stopped investing in mutual funds. Now we both use salary hikes and bonuses as an opportunity to invest."

Going by Dhirendra Kumar's statement, "Timing is not important but time in the market is very important," Thavva never gave in to the cliched beliefs of people that markets are a gamble, what goes up will come down, investing in gold is best, buying land is a must etcetera. As an investor, even during the most trying times of the sluggish market growth from 2015-2016, Thavva and his wife continued increasing their SIPs in tune with their salary hikes, which eventually gave them good returns. As on today, their combined SIP of Rs. 20,000 per month has reached to Rs. 1.2 lakh per month.

With no knowledge of what a term plan was, back in 2007, he took a Jeevan Anand LIC policy of Rs. 5 lakh both for his wife and himself. But after learning the benefits of Term insurance on VRO, he now has a term plan of Rs. 2 crore. Holding the importance of buying a personal health cover in addition to the one provided by the employer, Thavva also has a personal health insurance of Rs. 6 lakh in addition to his employer provided insurance of Rs. 3 lakh. As on today, both Thavva and Manjula have Rs. 6 lakh each invested in provident fund and together they own a land worth Rs. 20 lakh.

But how did Thavva and Manjula plan their investments? They listed down all the goals they wanted to achieve like planning for their children's education and marriage, buying a family vehicle, building a sufficient retirement corpus, etc. By creating a point based portfolio for each of their goals and attaching each goal to the amount of money required at the time of its maturity, they divided every goal into four parts with 60 per cent of investment in large cap, 20 per cent in mid cap and 20 per cent in small cap funds. Assuming a conservative equity return of 12 per cent and a modest inflation rate of six per cent they back calculated the required SIP investment for achieving every goal. Further, for their short-term goals like going on a vacation, they separately invested into liquid funds.

With this systematic approach, they were able to close both their car and home loan within a time frame of one year to three years. Today, Thavva and Manjula are proud owners of their second car, a brand new Brezza ZDI which they bought from the mutual fund portfolio specifically devised for the same. From Rs. 1 lakh in March 2009 they've now grown to a corpus of Rs. 1.2 crore. He happily adds, "November happens to be a joyful month for my family as my marriage anniversary, my elder daughter's birthday and my wife's birthday all fall during this month. The month definitely comes with a huge expense but we are always ready to spend lavishly because of the planned investments."
Between planning for his own investments, Thavva has also helped many of his friends to invest in mutual funds. Using VRO as the guide, he explained the benefits of long term investing and power of compounding to them. He has even given similar lectures in his company to educate his colleagues regarding the many advantages of choosing mutual funds over traditional investment avenues.

With known reasons of getting wealthier, the last three years have been very special for Thavva and his family. A firm believer of Warren Buffett's principle of "Save before you spend," Thavva is determined to achieve all of his goals step-by-step.

This story was first published in January 2019.

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