The importance of emergency funds, understanding of an Arjuna awardee

Life stopped for Nisha Millet, a professional swimmer, and her husband, Bikranjit Flloyd Chatterjee, after covid brought their swimming academy to a halt. Liquidating some of their investments in emergency debt funds and dipping into their commercial reserves helped them get through the tough times.

Millet is an Arjuna Award winner and was the only woman on India’s 2000 Sydney Olympics swim team. The couple run the Nisha Millets Swimming Academy in Bangalore, which was started almost 20 years ago after Millet retired as an active athlete.

Mint reached out to the couple and Deepesh Mehta, who has been guiding them on their investments since 2017, to understand their personal finance journey. Mehta is a Qualifying Certified Financial Planner and an AMFI Registered Mutual Fund Dealer.

Drawing lessons from the past

Speaking about the impetus behind starting her academy, Millet says she wanted to make swimming a fun learning experience, something very different from what she experienced as a child. Also, her parents did not plan well for her personal finances. She tells how they sold her house and spent all the money on her swim race, not leaving enough for themselves. This made Millet realize the importance of a retirement corpus so as not to have to depend financially on her children.

Saving enough to finance the careers of their 8-year-old twin daughters, Adele and Ariana, is another important financial goal for the couple. They would also like to set aside some money to buy a house later on.

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Unlike their parents, they haven’t shied away from imparting a few money lessons to their young daughters. When covid hit, they talked to their daughters about how business wasn’t doing well and that they didn’t want to use their savings for things like vacations. “Kids need to understand that there are ups and downs in terms of finances and they need to cut back on what they want as well,” says Millet.

Navigating through tough times

The last two years have been difficult for them, both in business and personal terms, as Chatterjee lost his mother. Mehta’s suggestion to park some money in debt funds proved helpful. A combination of tapping into their trade reserves, liquidating debt fund investments and cutting expenses worked for them. They had 12 months of spending on debt funds as emergency money.

Mehta also encouraged them to increase their health and life insurance coverage. Today, Millet and her husband have a $Rs 2 million life cover each, and a comprehensive health cover for the family ( $6 lakh sum assured plus $15 lakh critical illness cover). Fortunately, they didn’t have to use their health coverage during covid. They have also resisted the temptation to take any loans so far.

Disciplined spending, invest

On the business front, Chatterjee notes that around 60% of his income comes from the summer months and 40% from the rest of the year. The waves of covid hit them both hard in the summers. They are now back to 85-90% of their pre-Covid revenue and have adjusted staff payments and overhead to improve profitability. Since they run their own business, one of the first things Mehta did was identify their appetite for risk.

“We are responsible for four people, our children and our parents, so we don’t like to take too much risk on our investments,” says Millet. “We don’t have a fancy office and we just work from home. keep our overhead low,” she adds.

Mehta says that except for the period of March 2020-22, the couple has been regularly investing 30% of their savings in mutual funds. Debt funds comprise 15%, hybrid funds another 20% and diversified equity funds 65% of its corpus. “We never considered gold a serious investment, except for occasional purchases in the past,” says Chatterjee. Mehta says that he wanted them to invest 5-10% in gold and international funds by the end of 2020, but they didn’t. I have no funds to spare for this.

According to Mehta, the only thing pending for the family is to write a will. Since the couple had to discontinue their mutual fund SIPs for two years, he hopes they’ll hold off buying a home for a few years.

watching your back

Millet says that while her husband was initially dismissive of seeking professional help managing their finances, she is now happy that they have someone to watch their back. In the past, they were poorly sold products by her bank. Millet says that they are well aware of what Mehta is doing for his investment and do not question her judgment. “You need to have that level of trust and not micromanage,” she adds.

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