In April 2010, as I was leaving my corporate life, I toured my offices in Chennai, Hyderabad, Gurgaon and Noida for a farewell session with my colleagues. In each city, I also had a 2 hour session on wealth management to all those interested and quite a few employees came and met me one to one after these sessions for advice.
It is in one of these one to one meetings that I met this colleague (whose name I cannot reveal) – he had a total asset base of Rs 60 lacs (a house partially on loan and some cash at hand).He was fairly senior in our company – had a annual income of around Rs 25 lacs – had been working for more than 10 years – had clearly known how to earn a decent income – but had not learned how to invest his savings.
In those 10 minutes that we spent, I recall advising him to invest in real estate as Gurgaon real estate was really hot. We discussed the amount of loan that he should take and I shared my views about a good loan and a bad loan. I also shared with him why he should not look at stocks and Mutual funds and recommended to him an approach towards insurance. We also discussed the difference between investing in real estate in emerging locations and also the difference between pre launch offers and the post launch pricing of builders.
We obviously kept in touch on and off and last week he came home . He shared that his current assets is around 350 lacs and he has a housing loan of around 50 lacs – so his net worth has gone up from 60 lacs to 300 lacs in 30 months ( CAGR of 90%). His current salary has also gone up slightly. His investments are primarily in Real estate and he has now invested in 4 properties - most of which have appreciated very well – they are not yet yielding rental income – but once that happens - he will be financially free.
Let me share what he said to me - in his words -
"2009 was deep recession and 2010 was when market started picking up. I took the risk of investing in couple of properties at a pre-launch price at that time, which gave me decent return. So, what I did right was:
1. Identify the opportunity (Market had just started picking up)
2. Take some risk (I took the risk of investing in two properties). It has paid off.
Raja, no one knows the future. I listened to you couple of years back, got inspired by what you had done to manage your finances, understood your advice and took some courage to act on it. I never knew that it will pay me so much. Thanks a lot!"