An employee, an entrepreneur, an investor and an avid learner - 85-year-old Mohan Lal Jain has many feathers in his cap. Here's his must-read story.
Every year on his birthday, Mohan Lal Jain takes his family on an international trip using his savings. "My investments have not only enabled me to live independently and with dignity in my old age but they have also helped me live life to the fullest," says the 85-year-old.
Mr Jain was part of the first wave of investors who had embraced mutual funds as an investment vehicle before they became mainstream. With his discipline, passion for investing and commitment to learning, unlearning and relearning, he has managed to create a sizeable mutual-fund corpus over the years.
A modest background
Mohan Lal Jain was born in 1937 in an educated family in Beawar, Rajasthan. He completed his graduation in the field of science from BITS Pilani and landed his first job in Mumbai in 1960. Post his marriage in 1961, he went to the UK for a one-year paid internship (1962) and after returning to India, had a pretty fulfilling professional career.
However, Mr Jain always harboured entrepreneurial ambition. In 1990, at the age of 53, he started the business of manufacturing audio cassettes under the name of Bahubali Electronics Pvt Ltd, which soon became one of the leading players in the industry. He says, "Over the years, with the advent of CDs and online music, the industry became a sunset industry and we diversified into manufacturing PET preforms, bottles and machines. The business is currently run by my sons and I oversee the finance function."
The beginning of his investment journey
In the 1970s, he started investing a few hundred rupees every month in the UTI 64 scheme. Sharing what attracted him to the scheme, he says, "In those days, the UTI 64 scheme came with almost guaranteed returns and a government backing. Further, the return was higher than what bank fixed deposits offered."
Around the early 90s, he started exploring and investing in equity and debt funds. He recalls, "I read recommendations in mutual fund magazines and newspapers and even attended various seminars on mutual funds to enhance my knowledge." It was through such media interviews and articles of Dhirendra Kumar that Mr Jain got introduced to Value Research. Sharing how Value Research has been helping him, he says, "I enjoy reading various articles on the fundamentals of investing. I read 'Mutual Fund Insight' carefully and try to incorporate the recommendations. Experts' advice guides me and also reaffirms my investing beliefs. Value Research star rankings are also very useful in decision-making."
During the early days, he used to invest equally in both equity and debt funds. As he slowly gained confidence, he started increasing his exposure to equity funds.
However, he eventually opted for aggressive hybrid funds. According to him, "These funds take care of my asset-allocation requirements and are convenient since I don't have to do the rebalancing myself. They also enable my debt investment to be favourably taxed like equity and rebalancing is done by the fund in a tax-efficient way."
During his salary days, he used to make monthly investments regularly on his own instead of using the SIP route. Later, as his income from the business wasn't fixed, he has been investing a lump sum. For adequate diversification and asset allocation, he tends to invest in four aggressive hybrid funds. However, he currently holds six funds, as two of them are underperforming and he has been gradually exiting from them keeping in mind tax implications. The current CAGR of his mutual fund portfolio is about 13 per cent.
His fund-selection framework involves checking the fund's expense ratio, rolling returns, CAGR, the fund manager's profile and the reputation of the fund house. Additionally, he checks the debt exposure of the fund and avoids funds with excessive credit risk.
He also has investments in traditional fixed-income avenues, such as the PPF and tax-free bonds. Further, he keeps some money in his bank account for monthly expenses. Overall, he currently maintains an allocation of 60:40 to equity and debt.
A patient, future-ready investor
Given his long investing journey, Mr Jain understands the importance of patience. Sharing an example, he says, "During the subprime mortgage crisis of 2008, all mutual funds lost a lot of money. But I did not let that bother me since I was a long-term investor. I remained calm and further invested more money as I had developed confidence in the fact that volatility was part of the game and ultimately the situation will change for the better." He made sure to stick to these principles even during the March 2020 fall, owing to the COVID-19 outbreak.
On a scale of 1 to 10, he gives himself a 10 on financial preparedness, "Considering my lifestyle and savings, I feel I am financially secure and not dependent on my children for my financial needs." His successes, he says, have been satisfactory and steady. With his personal accumulated corpus currently around Rs 25 crore, he says, he is well covered for all his financial goals.
Besides, to ensure sufficient mutual-fund savings for his entire family, he started investing in the names of all family members early on. Until the 1990s, he had been contributing to the family members' accounts, including the first investments of his grandchildren. "By making each family member financially independent, I have indirectly taken care of all my financial responsibilities, which gives me immense pride and peace of mind," he states. While he isn't contributing to other members' portfolios, he still looks after the fund selection.
Here's his advice to young investors:
1. Read 'The Psychology of Money' by Morgan Housel.
2. Start early and be patient.
3. Do not chase supernormal profits and invest as per your risk tolerance.
4. Keep things simple.
This story first appeared in the August 2022 issue of Mutual Fund Insight.
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