Adjusting education portfolio
Shenoy had started making investments for his son’s education goal in 2017. As mentioned, the expected goal was domestic education at the beginning.
He started investing for the goal from his PMS in 2019. He assumed weighted average returns of 12.2% from a 60:40 equity:debt portfolio, which was part of his PMS firm’s goal-planning tool. His son was aged 12 in 2019. The equity allocation was a mix of Capitalmind’s active and passive PMS strategies. The debt portion was a mix of short-duration and long-duration funds.
In mid-2021, it was decided that overseas education would be more suitable, which meant adjusting the education portfolio. His son still had four years left before starting college.
“I had to get aggressive, increase my investments and increase the equity allocation to 75%,” Shenoy explained.
For the overseas education plan, he made the following assumptions: US education inflation of 2.5% and currency depreciation of 3.5% (rupee versus dollar). While the education inflation ended up being higher at 3.5%, Shenoy made up for it with additional investments.
Over the next four years, a combination of higher investments, higher equity exposure, and reasonable returns from the education-linked portfolio helped Shenoy come close to his targeted education corpus. In today’s terms, US education costs around ₹2.4 crore.
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His own investments
Excluding the education-linked investments, Shenoy’s own asset allocation is 75% equities and 25% arbitrage funds. His PMS also had a separate arbitrage strategy that was more tax-efficient after debt investments lost their indexation benefit, and hence, he made all his new fixed-income investments in arbitrage from FY23.
He says he exited his international exposure earlier this year (in January)—held through Nasdaq ETFs (exchange-traded funds)—and is 100% invested in domestic equities.
“That exit worked out well as US stock markets appeared expensive and since January, they have underperformed,” he pointed out.
His portfolio, though, was marginally positive over the past year. He says the returns were 3.5%. His own investments were largely in his firm’s PMS products.
Over the last 5 years, his portfolio has delivered 19% annualized returns. He says he is on track for his retirement goals. “I have already reached 50-60% of my retirement corpus. So, it is on track. But if Capitalmind does well, then that would itself be a very big kicker to my goals as I have a meaningful stake in the business,” he says.
Also read: What makes Mirae Asset’s Swarup Mohanty paranoid about his retirement corpus
Mutual funds
As Shenoy’s Capitalmind Financial Services has received the mutual fund licence, as part of the regulations, Shenoy will move his own investments to his new fund house’s mutual fund schemes. Regulations don’t allow mutual fund executives to own stocks directly, like in a PMS account.
For now, he has shifted the funds from his PMS to index funds. These are in Nifty 50 Index fund (37% of equity exposure), Nifty Next 50 Index fund (33%) and Nifty 150 Index Fund (30%). The latter represents the mid-cap segment; 101st to 150th stock in terms of market cap.
Pocket money lessons
Shenoy says he used to invest his kids’ pocket money in liquid funds, but his sons made him switch their pocket money investments to equities. “I used to regularly share with my sons the progress of their investments. They compared their education-linked investment—which was largely in equity—with their pocket money investment and told me to switch to equity as they wanted similar returns on their pocket money. So, I started investing their pocket money in equity index funds,” he says.
In spouse’s name
Shenoy has put all the investments in his wife’s name. “If something were to happen to me, it would be easier for my wife to access the investments if they were in her own name. If something were to happen to her, I am savvy enough to move things around and access the funds,” he explains.
Life, health cover
Shenoy has basic health covers of ₹10 lakh ( ₹5 lakh from family floater and ₹5 lakh from employer cover), and a super top-up of up to ₹50 lakh.
The super top-up will kick in after the first ₹10 lakh is paid for. “My thinking was that ₹10 lakh in medical costs, even I should be able to afford if needed, but I should have an additional buffer if higher costs are required in a medical emergency,” he says. Shenoy has a term cover of ₹1.5 crore, which will lapse when he turns 60. “I don’t expect to depend on my income after crossing 60. Hence, I don’t wish to cover my income. The term cover plus my savings should be adequate for my family in case something were to happen to me. Additionally, I also have a stake in the business,” he says.
He additionally holds 10 months of living expenses for contingencies, which is held in arbitrage funds.
Staying healthy
Shenoy says for the last several years, he has not prioritized his sleep. “I think I have only been sleeping for four to five hours. And, I would try to somewhat make up for it over the weekend or a holiday, but this was not a healthy practice. Now, I have moved my sleep to six hours. I plan to bump it up every month. That is a major health goal for me,” Shenoy says.
He has also tweaked his diet by reducing his carb intake. He used to play squash, but after hurting his knee, Shenoy is doing body-weight exercises at home.
He adds that he is trying to prioritize family time as well. “Just like the tagline of our new fund house—win at life—I think it is important not to just focus on making money all the time, but also to improve the quality of life. Hence, we try to now spend more time as a family—try to go for movies, travel, outings, etc. Now that my older son will be going to the US for studies, we will be travelling to the US and Europe,” Shenoy says.