Why ULIP mis-selling has become rampant ?

It is a well-known fact that medical debt is one of the primary reason for poverty in India. But that’s not the case with 38-year-old Anshuman Kumar, who has achieved financial freedom even after undergoing a kidney transplant in 2002, much before starting his career. Hailing from a middle-class family and dealing with a medical crisis at a very early age made Anshuman understand the importance of achieving financial freedom. So, he decided to be a banker.

Almost by definition, bank officers are expected to be stolid, risk-averse and somewhat predictable. Having started off as a probationary officer of Allahabad Bank in 2009, Anshuman was perhaps expected to spend a run-off-the-mill, banal life. But the urge to be not just physically fit but financially fit as well changed the course of his life.

In 2009, this Ranchi-resident invested an entire month’s salary in Birla Power Corporation driven by the logic that it had a Birla tag and was trading at only Rs 2.16. Unfortunately, he lost his entire capital.

That’s when Kumar learnt a valuable lesson — greed for making a quick buck without any research usually ends in tragedy. Having learnt the hard way how the behavioural aspect impacted his investment decisions, he surrounded himself with books of financial pundits.

The Psychology of Money by Morgen Housel, One Up on Wall Street by Peter Lynch, Reminiscences of a Stock Operator by Edwin Lefevre and other old classics like Rich Dad Poor Dad, by Robert T Kiyosaki and The Intelligent Investor by Benjamin Graham were his favourite books.

Through this experience, Anshuman realised the strong link between human behaviour and wealth. He discovered that human needs are not huge, but it’s the wants and desires of a glittering life coupled with a poor financial choice that is an obstacle to creating wealth.

Small yet steady

Anshuman’s wealth creation journey started way back in 2004 with his father doing the first SIP (systematic investment plan) in his name, which he continues till date. A mere Rs 2,000 monthly contribution in HDFC Equity Fund over the past seventeen years has now galloped into Rs 17 lakhs growing at a compounded annual growth rate of 15%.

The portfolio

Equipped with the desired financial quotient and learning the hard way how behaviour can impact returns Anshuman embarked upon his financial freedom journey by allocating 10% to debt and 90% to equities. Direct stocks were accumulated in multiple tranches only developing personal conviction and foresight into the business model.

Today his portfolio consists of stocks like CDSL, IEX, CAMS, HDFC Life, Asian Paints, Divis Lab among others that are growing at a compounded annual growth rate of 35%.

Besides direct stocks equity mutual funds have also created wealth for Anshuman. Some of his best bets have been HDFC Flexi cap, Axis Long term equity, Kotak Flexicap, ICICI Value Discovery, ICICI Balanced Advantage, Axis Small Cap, HDFC Small Cap, DSP Mid Cap, Kotak Emerging Equity and Motilal Nasdaq100. Through these funds, Anushman has been earning 17% annualised returns over the past 17 years.

To be efficient and for ease of management, Anshuman restricts his portfolio to only 10 mutual fund schemes and about 15 stocks.

Financial funda

Over the years, Anshuman has mastered the art of averaging. He believes that despite it being an underrated method of wealth creation, it is the simplest way of building wealth with his average purchase price mostly below the present cost price. “There is always a cushion of profit I’m sitting on, and this cushion gives immense mental relaxation,” says Anshuman.

Giving back

Having tasted success, Anshuman didn’t shy away from making financial plans for his close ones to help them secure a better financial future.

To help people in their investment decisions, in 2013-14 he ran a website for a year under an initiative by Google to gauge how much people would be interested in taking his help for their investments. Through the website, he understood the kind of help people were looking for.

Over the years, Anshuman helped people start SIP from as little as Rs 500 per month to more than a couple of lakhs per month.

“Currently, I am actively helping over 80 people achieve their goals and I want to take this number to a maximum of 100 people. I don’t think I’ll be able to do justice to a bigger number of people. After that, it’ll become just like a business of money-making which is the last thing I want,” says Anshuman, visibly satisfied.