Growing up in a middle-class family in Bengaluru, Swaminathan was always acutely aware of the importance of financial independence. His father, a banker, instilled in him the value of saving and prudent financial management from an early age. “I was determined to build a secure financial future for myself,” he says, reflecting on his mindset when he first began working.
As a young IT professional, Swaminathan was determined to create a solid financial foundation for himself. From the very start of his career, he adopted a disciplined approach to saving, setting aside 30% of his income each month. “I didn’t want to rely on my parents for financial support. I wanted to make sure I could stand on my own two feet,” he explains. In the early years, Swaminathan primarily parked his savings in fixed deposits (FDs), which offered the safety and stability he craved.
As his career progressed, Swaminathan began to question whether FDs alone would be sufficient to meet his long-term financial goals. The returns, while safe, were modest, and he started to explore alternative investment options. In 2009, he took his first steps into mutual funds for the higher potential returns they offered. However, it was far from smooth, especially during market corrections in 2012-2013, which left him confused and unsure of how to proceed.
In 2015, during his first sabbatical, which lasted two years, Swaminathan had a pivotal encounter. While on a casual bike ride around the city with his cousin Rajesh, the two found themselves discussing their careers and financial journeys. Swaminathan shared his early struggles with investing, while Rajesh spoke about how his financial outlook had been transformed by working with Kaliappan, a registered mutual fund distributor. Swaminathan expressed interest in meeting Kaliappan.
Since then, Swaminathan has taken two more sabbaticals—in 2022, he took a 17-month break, followed by his most recent sabbatical, which began in March. Thanks to his disciplined financial planning, these sabbaticals have allowed him the freedom to recharge without impacting his long-term financial goals.
“Meeting Kaliappan was a pivotal moment in my financial journey,” Swaminathan recalls. “His expertise and personalised approach really resonated with me.” Kaliappan took a holistic view of Swaminathan’s financial situation, assessing his investments, savings habits, and long-term goals.
One of the key lessons Swaminathan learned from Kaliappan was the power of compounding and the importance of starting early. “Even small, regular investments made at a young age can snowball into a substantial corpus over the years,” Kaliappan had advised. This opened Swaminathan’s eyes to the potential of long-term investing, and he realised that his early habit of saving 30% of his income had already given him a significant advantage. By channelling his disciplined savings into more growth-oriented investments, such as systematic investment plans (SIPs) in mutual funds, he could accelerate the growth of his wealth.
Insurance and emergency funds
However, before delving into planning investments, Kaliappan stressed the importance of building a solid financial foundation. The first step was to establish an emergency fund. Swaminathan allocated around 15% of his total portfolio to this emergency fund, which was kept in easily accessible savings accounts and fixed deposits. “This gave me peace of mind knowing that I could handle any financial contingencies without dipping into my long-term investments,” he says.
Next, Kaliappan advised Swaminathan to reassess his insurance coverage. Initially, Swaminathan had health insurance with a coverage of ₹30-40 lakh, but the pandemic made him realize this might not be enough to safeguard his family. He decided to significantly increase his health insurance to ₹1.3 crore. His plan includes a base sum insured of ₹20 lakh with an additional ₹20 lakh as a bonus, for which he pays a premium of ₹33,234 annually. Additionally, he opted for a top-up of ₹90 lakh with a ₹10 lakh deductible, paying an extra ₹12,650, covering both him and his family—two adults and two children.
In addition to health insurance, he also secured a term life insurance policy with a coverage of ₹1.5 crore and an annual premium of ₹45,000. “This step gave me the assurance that my family would be taken care of even if something were to happen to me,” he says. By prioritising these foundational elements—comprehensive health and life insurance alongside an emergency fund—Swaminathan laid a solid foundation for his long-term investment strategy, free from the fear of financial instability.
Balancing security and growth
He was now ready to focus on long-term wealth creation. Under Kaliappan’s guidance, Swaminathan continued investing through SIPs in mutual funds, gradually building a diversified portfolio. Before meeting Kaliappan, Swaminathan had been consistently saving 30% of his income in fixed deposits. He used a portion of these savings, along with his increased earnings from a successful career, to prepay his home loan.
He had purchased his home around 1995 and, thanks to his disciplined financial habits and rising income, was able to clear the loan within five years by the early 2000s. “Paying off my home loan so quickly was a huge relief,” he says. “It gave me even more financial freedom and flexibility.” This early achievement set the stage for Swaminathan’s continued focus on long-term investments and financial independence.
Swaminathan’s career also took a positive turn during the pandemic, when he was part of an edtech company that saw significant growth. This strengthened his financial position and allowed him to continue building his investment portfolio. “I was fortunate to be in a sector that thrived during the pandemic, which helped me further secure my financial future,” he says.
Swaminathan has carefully structured his asset allocation to balance security and growth. He holds 16% in bank deposits and bonds, 53% in hybrid mutual funds—which include multi-asset funds, balanced advantage funds (BAF), and debt hybrid funds—and 31% in his employee provident fund to ensure long-term retirement security.
“I’ve successfully funded my daughter’s education and marriage, giving her a strong start in life. Similarly, I’ve secured my son’s education, ensuring he has the resources he needs to pursue his dreams. I feel confident about my retirement plans, allowing me to enjoy this next chapter without financial worries,” Swaminathan says.
A hobby fund
Swaminathan’s diversified portfolio even includes a dedicated travel fund, which gives him the flexibility to pursue his passions without compromising his financial security. To ensure that his interest in biking doesn’t interfere with his long-term financial goals, Swaminathan has set aside 15% of his investment portfolio for biking-related expenses, including maintenance, upgrades, and new purchases. “I’ve compartmentalised my biking expenses so that I can enjoy my passion without affecting my broader financial objectives,” he explains.
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While Swaminathan now has the financial freedom to retire, he hasn’t ruled out the possibility of taking on new projects or roles. However, any decision to return to work would be driven by passion rather than necessity. “I’m open to taking on a new role but it would have to be something that aligns with my values and allows me the flexibility I desire,” he says. His primary motivation would be to continue learning and contributing, potentially by mentoring others. However, he remains mindful of not disrupting the financial strategies he and Kaliappan have carefully implemented.
Swaminathan also emphasises the importance of maintaining a consistent cash flow to support his desired lifestyle without depleting his investments. He uses a systematic withdrawal plan to draw a predetermined amount from his investment portfolio each month, ensuring that his core investments continue to grow and compound over time. “The SWP allows me to enjoy my current lifestyle without compromising the future growth of my portfolio,” he explains.
Lessons for young investors
As Swaminathan reflects on his journey, he offers valuable advice to young investors: “Start early, live within your means, and avoid unnecessary debt.” He stresses the importance of developing a disciplined savings habit, just as he did early in his career, and the value of seeking professional financial advice when needed. “The guidance of a trusted financial advisor like Kaliappan can be invaluable in helping you understand the complexities of investment planning and risk management,” he says.
Looking back at the days when he met Kaliappan, Swaminathan acknowledges that his passion for biking wasn’t just about the thrill of the open road; it was symbolic of the financial independence and freedom he sought. “Those bike rides were a reflection of my growing financial maturity and the steps I was taking to secure my future.”
