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Customise your financial plan considering your investment objectives.

This week we bring ‘money mantra' from Dr Suresh Surana, a chartered accountant who specialises in International Taxation and Corporate Advisory. He is the founder of RSM Astute Group, a leading accounting and consulting company.

What are your top financial goals?

My top financial goals are financial security, optimising financial returns and risk diversification.

What does money mean to you?

As Oscar Wilde said, “When I was young I used to think that money was the most important thing in life; now that I am old, I know it is.” Money is essential to ensure the fulfilment of my personal objectives, for financial security and for investing in new ventures.

How should one plan investments to beat inflation?

The current rate of return on fixed investments, around 9-10 per cent is only enough to offset inflation hovering at around 9 per cent . So, it would be prudent to reassess the investment basket and pick some long-term high growth stocks of well-managed companies. Investment in the real estate market in lower and middle income housing segment and particularly in Tier II & Tier III cities is also a sound option. Similarly, international investment in high quality stocks within the permissible limit of $200,000 is also a good alternative.

Does gold feature prominently in your portfolio?

Gold is not a significant but only, a small part of my portfolio. But one still needs to have some exposure to gold as it does not move in tandem with either stocks or debt products. Besides, it offers a good hedge against inflation and any global economic crisis.

What is your key learning experience from investment?

One of the key investment learnings is that an individual investor should work with a 2-5 year perspective rather than acting as a speculator or trader. One should avoid investments based on “tips” or “follow the herd” mentality. The quality of management and industry segment the company operates in are crucial for selecting right stocks.

Which investment that has made the most money for you?

Investment in real estate, high-growth stocks and gold has worked for me. I also have a well-diversified portfolio with investments in equities, mutual funds and a fair mix of short-term and long-term bank deposits. As the current returns on debt instruments are high and the interest rates in the medium-to-long term are expected to come down, partial investments in debt instruments should be considered.

What is your message on savings and investments for investors starting their career?

I would like to advise investors starting their career, to invest in quality long-term high-growth stocks . Secondly, investment in housing real estate with a well-structured bank loan consistent with the income levels and loan repayment capability too can be considered. Further, it would be advisable to obtain life insurance coverage at least to the extent of the outstanding loan. These are tax efficient too. .

How do you suggest young investors start their investments and make a financial plan?

It is essential to customise your financial plan considering your investment objectives, risk appetite, financial security, housing needs, family obligations and diversification. There is no standard financial plan.

Do you draw inspiration from any investment guru?

I have always been an admirer of Warren Buffet and have an immense appreciation for his value-picking investment strategies