The 50/30/20 Formula

The path to achieving financial wellness starts by inverting the equation of ‘income minus expenses’ into ‘ income minus savings’.

Does moulding your money habits seem too overwhelming? Does thinking of how to build a road towards the future and get started makes you feel at the end of your wit? You don’t need to grasp at the straws anymore with this budgeting trick! 

The 50/30/20 Formula

The 50-30-20 budgeting rule suggests the division of income after taxes into obligations, goals and splurges.

50% of your income – “Must-Haves”

Warren Buffet calls the Must-haves, “ the heart of your Balanced Money plan”. This section of your income is dedicated to fulfilling all your basic needs which are crucial for your survival. These are the expenditures you need to incur on a day-to-day basis. It also includes minimum payments you need to make on your debts. Such payments may include groceries, utilities, housing, car payments, etc.

30% of your income – “Wants”

Expenditure on items that fall in this category is a choice. The main aim of such expenses is up-gradation of your lifestyle. For instance, buying a Mercedes instead of a more economical Honda. 

This 30% bucket includes vacations, entertainment, gym fees, hobbies, pets, eating out, cell-phone plans, and cable packages. These are things you don’t really need to get by.  A want for some people might be a need for others. For example, some might have photography as a hobby and some might want to pursue it as a career. So such people might spend more on photographic equipment and lessons.

20% of your income – “Savings” 

The remaining 20% of your savings goes to an often overlooked part of your income: your financial goals. This includes debt savings and investments.

Save 20% of my income? That’s impossible! 

Getting your expenditures into the right bracket and balancing your income in these exact proportions might not be possible for you immediately. There might be a real circumstance preventing you from hitting the right equation. 
If yes, then hold on to this key: If you can’t get your money in the exact balance, get as close as you can!
If not 20% of savings, then can you save 15% of your savings? If you can’t bring down your obligatory expenditures to 50%, then can you bring it down to 55%? A 55-30-15 plan is better than a 60-40-0 plan. 

Make Adjustments where Needed.

Granted, the 50/30/20 plan isn’t the only percentage-based budget. All percentage-oriented budgets are entirely customizable.
The percentages you set are adjustable based on your fluctuating income. Perhaps a 60/20/20 or 40/20/40 works best for you. If you just got a raise, for instance, you might be able to focus more on paying off your debt. But, if your rent rates have risen, it could mean cutting back on the amount you set aside for your “wants”. 
Hence, look at your existing finances to set a plan for the long term! You can tweak and revise your spending/saving categories according to your current earnings and lifestyle, allowing your budget to do justice to your current financial situation. 

Dodge these Investment Pitfalls in 2020

As you take stock of the triumphs and blunders made in 2019, the new year is the best time to brush up on the basics and become a better investor.

Most mistakes investors make are due to their own biases which keep them from making rational decisions. These biases are psychological – they are basically ‘hard-wired’ into us as humans, and in many cases are very helpful in making decisions. In investing, however, they often lead us to poor decisions and loss of returns.

Here are some pitfalls you need to avoid throughout the investment journey as we enter the new year.

1) Out with the old and in with the new

As the difficulty in the market escalates, investors tend to concentrate their portfolio on an investment strategy that has worked previously, thus missing an important turning point.

Your investment strategy needs to adjust as the tides turn in the investment market.  One should always reminisce that no asset class is designed or programmed to move in a straight ascending line. Warren Buffett has summarised it well in 18 words: “Volatility is not the same thing as risk, and anyone who thinks it is, will cost themselves money.”

For instance, temporary losses is often a cause of panic among investors. They tend to sell when equity asset prices start falling, whereas, actually they should be making purchases in a declining market. On the other hand, when equity prices are on the rise, investors generally tend to become avaricious expecting further gains, while that may not be the right move.

Instead, it is recommended to keep an open mind when it comes to investing and make sure you have a balanced, diversified investment mix.

2) Don’t let saving cost you money

Letting idle money waste away is a fool’s errand leading to lost opportunities. “The one thing I will tell you is the worst investment you can have is cash,” is how Buffett explains on how to view holding cash. If you chose to keep ₹50,000 under your mattress for 5 years instead of investing it with a compound interest of 10%, you choose to forego on a return of ₹30,592.05. 

If you’re just saving and not investing, you’re setting yourself up to lose money in the long run. That’s because inflation causes prices to rise, which makes money less powerful over time. The anecdote of losing money to inflation is investing.

3) Quit being silent about money

Not only are we bad at dealing with money, but we’re also bad at talking about money. But, the good news is that the more we talk about it, the more confident we are and the more information we have to make better and less stressful financial decisions.

Sharing and comparing your financial wins and fails is a great way to keep yourself motivated and pick up valuable tips about how you can improve these circumstances more quickly and efficiently. Within this framework, one needs to bear in mind the fact that WHO you speak to on the topic of money and finances does matter. We at CAGRfunds, give you that “second opinion” you need and set you on track to meet your financial goals. 

Mistakes are part of the investing process. Knowing what they are, when you’re committing them and how to avoid them will help you succeed as an investor. Watch this to take better control of your finances in 2020.

What is the most poorly understood area of personal finance?

Success in personal finance is based on some simple practices followed by individuals over a long period of time. Charlie Munger has summarized it well in 15 words:

Spend less than you make; always saving something. Put it into a tax-deferred account.

I often feel people under-appreciate the importance of tax deferral for their investments. I have created a small calculation which highlights how tax-deferral in itself has a huge impact over the long term.

Let us discuss two tax systems applicable to investments:

Accrual Based Taxation: In the above taxation one has to pay tax on the income generated every year and the actual tax is not dependent on whether an investor has redeemed his money. A simple example for this is a fixed deposit where you pay tax on an annual basis irrespective of maturity/redemption of fixed deposits.

Cash Basis of Taxation: Under this taxation structure tax applicability is based on actual redemption/maturity. An investor does not need to pay tax unless he makes an actual redemption. This helps an investor to take advantage of deferred tax until he redeems his investments. Some examples of such instruments are NPS (National Pension Scheme), Mutual Funds (MF)

Now let us assume two individuals earn a similar return over a period of 30 years which is 15% and are taxed at the same rate which is 30% of the income.

Investor 1: Ramesh: An investor invests 10lakhs in an investment instrument (say FD) at 15% for 30 years and is being taxed at 30% every year. (Applicable taxation is accrual basis)

Investor 2: Rakesh: An investor invests 10lakhs in an investment instrument (say MF or NPS) at 15% for 30 years and is being taxed at 30% only at the end of 30 years. ( applicable taxation is cash basis)

When we run these investments over 30 years we realize the importance of deferred taxes on long term investment portfolio. Let us see the results:

Ramesh will receive Rs. 1.81 cr. and which translates to a CAGR return of 10.50% (post-tax). Rakesh will receive Rs. 4.06 cr. and which translates to a CAGR return of 13.61%. (post-tax). That’s a whooping difference of 2.2 cr. just because of deferred tax advantage.

So, what we conclude from the above example is that a simple deferred tax advantage available to us as investors if understood well and implemented in accordance to our long term financial goals will have a significant difference to our long term wealth.

Mental Shift – one small step towards making you richer

In order to properly balance living in a sometimes chaotic world, it is important for you to have beneficial attitudes. This is especially important when managing your finances. With very simple but effective steps, this too can be very easily done.

Here are a few ways of how some of our clients implemented a mental shift to achieve their wealth goals:

1. Mapping every saving to a goal – While plans don’t work often, having one in place helps anyways.

Goal-oriented savings create discipline and accountability in one’s behaviour which helps to remain focused on the objective. Savi & Vinod, a newly married young couple started saving up for a house as their long term goal. With an expanding family and a few emergencies that sprung up, at times they noticed that their contribution towards their dream home had to be re-looked at in a manner that they could still manage the rest of their expenses carefully and not ignore their ultimate goal or delay the time frame of when they charted out to achieve it. Today, after 8 years of starting to invest, they are very close to achieving their goal comfortably.

2. Starting to invest is important, even if the amount is small – Cost of delaying investment is a huge opportunity cost our minds cannot see.

Better late than never applies to everything good in life. We had a set of clients who realised the importance of savings only after the first few years of working. Being brought up in very privileged homes, while the awareness existed, it did not necessarily manifest itself in taking action towards it. Those few years when there was income generated but not invested was a missed opportunity to create wealth. However, now that there’s a start, there should be no looking back.

3. There is world beyond banks when it comes to savings and investments.

This is no new news but traditionally banks are the first thought that come to the mind when thinking of savings and investments. While some of our clients have approached us with the same mindset, they were quick to learn and understand the options beyond banks and have been reaping the benefits of it too.

4. There are no free lunches – Be comfortable to pay experts if you know managing your money is something you are not good at.

Handling money is very critical but you may not be always savvy of the best ways to do it. Luckily, you have us – financial planning experts. Engaging experts who understand your needs and wants and help you plan your finances accordingly, is very easy and doable. Just as practical as it is to pay a specialist who cares for some specific need of yours, paying financial planning experts for their services is no different.

5. Enjoy the process of savings – Just like we enjoy the process of using discount coupons against our purchases.

We create wealth not just to live a comfortable life, perhaps one of our dreams but also to ensure that we are secure in various ways. Being able to create that security for ourselves is empowering and should be a relieving feeling, not a stressful one. After all, working to achieve something is motivating enough when you know that it’s a reward that you’re creating for yourself over time.

Financial literacy among children

Education of a child begins at home and in India, I have not seen many parents talking about “money” and “finances” to children from a very tender age. The conversation is limited to what we can buy for them and vice versa. Conversations around savings, rising cost of living, goals is largely missing. As children, we did save a portion of our pocket money in our “Gullak” (a box where children lock away their savings). But we were not really taught about growing that money.

In my view, financial literacy is incomplete without connecting the dots. Asking the child to save his pocket money is just one part of the whole game. It probably only inculcates a habit of putting away a part of what he owns for future consumption. That is indeed a good start. However, explaining the concept of inflation and the fact that inflation will continue to be a reality is not there. Basic understanding of investment products is something children don’t understand even till they start working. And this lack of awareness throughout our early years – at home, school and college is the reason why financial savings penetration in India is miniscule.

We have started discussing a lot about making children aware of a lot of things. However, implementation is very low. Specially, till we do not see this being implemented as a subject in schools. Anything which is incorporated in schools is automatically taught at home too. A simple subject on “money” will prepare the next generation for financial planning in the right way.

Life lessons that stuck to me

Happy Teacher's Day

Life and failure are the biggest teachers, as they say. Every day in life is a learning of a different kind and some of the lessons learned stick with us forever. And of course, teachers come in different forms – a friend, a colleague, a family member, a mentor or simply even a book or a blog these days.

I’m happy to share that a lot of my thought process is influenced by three people – my dad, Charlie Munger and Warren Buffet. Financial planning being the core of my work, here are some of the most memorable life lessons that I go by which I’ve learned from them.

  • You should be ready to try things. Even if you fail, it is fine. People who succeed are the ones who tried.

I’ve felt encouraged to start a business with this very belief and voila, with the right resources, support and most importantly by trusting my instincts, today we have CAGRfunds.

  • Focus on the work in hand and live in the present.

Time spent regretting about mistakes made in the past can instead be well invested in trying to learn from the same and develop yourself to become better. The analogy is the same as focusing on your goals and working towards them today so that the future is secure.

  • Discharge your duties faithfully and well. There is no alternative to hard work.

No pain, no gain. A simple learning which we all know of. We, at CAGRfunds ensure that we advise our clients earnestly, by thoroughly understanding their needs and ensuring that their investments are made wisely. Having seen the results of working hard is a reassurance of this lesson.

  • Never cheat someone to make money. It comes back in the form of Karma.

Money is precious to everyone. Being in the business of finance has given me enough reasons to understand that, educate people about it and most importantly, to handle it well for other people who trust us with it. Everything connects to everything else – just like karma. You save enough now, you have a lot taken care of in the future. You ignore managing your money now and your money won’t help you much in the future.

  • Avoid envy and resentment. These two are subtle emotions but have serious and bad consequences.

Negative emotions can make you take wrong steps causing losses of various kinds. They can make one act thoughtlessly or hastily – both not advisable in financial planning or even otherwise generally in life. A valuable lesson that applies in business as well as in my personal life.

Happy Teacher’s Day!

A head for numbers and a heart for words.

Sonia Gandhi Limaye is the founder of Kalamwali and Rightwords Publications Pvt. Ltd. in Pune. Born and raised in a business family, she knew that she always wanted to be a business owner. But that said, she was also clear about establishing and running an organisation that would let her have a good work-life balance, for herself and for people working with her. Being very clear in her mind about not having to choose work over family, children, hobbies and social responsibilities, Sonia took the right steps towards founding her start-up.

Kalamwali was conceived as an idea in 2014 and relaunched in 2016. It is a platform for writers and an online publishing website that allows all kinds of writers to publish their work in the form of stories, experiences, poems, recipes, tips and much more. It’s a constantly growing community of readers and writers. Apart from an online existence, Kalamwali also conducts an array of literature related activities like storytelling and creative writing sessions for both kids and adults.

In 2016, Sonia released a self-published anthology called “The Best of Kalamwali” with the 50 best write ups on the company’s website. The book was a huge success and both the readers and the writers coveted its copies. This year she and her team are working towards publishing the second edition of the anthology.

Since writing is her passion, she started Rightwords Publications Pvt. Ltd. in 2017. A small and intimate set-up, they are a humble enterprise with a strength of four. With a focus on content related work such as content strategy for websites, brochures, Social Media pages, they are currently working with four very well-known clients based out of Pune.

Sonia’s passion to translate ideas into possibilities was her main inspiration to become an entrepreneur. Besides, she did not see herself in a 9 to 5 job especially feeling averse to the monotony that she thought would be attached to it. However, she like many other entrepreneurs had her set of fears while starting out on her own. “Failure of not being able to explain my idea through my work. Fear of realising that work is boring for my employees and they hate their job. To face an unhappy client at the end of a job work.”, she states were some of them.

Sonia’s entrepreneurial journey has been slow and steady. She funded her business from her savings when she started off and now it’s almost self-sufficient. She explains that had her capital investment been high, she would have considered options to raise money. But that would have come with a lot of pressure to pay off. She shares from her experience what all should one be cautious of while starting off on their own, “Have a clear idea of what you want to do and what you want to achieve with that. Don’t get carried away into something that may look very lucrative or easy. There is no such thing as an ‘easy business’ or fast money or quick success. Let your dream take its own course of time. Don’t trust anyone blindly with your finances. Do as much research as you can on your own about the various options to manage your finances. Consult a financial planning advisor once you’ve done enough research on your own. Take things in your hands. As soon as you accumulate an amount, however small, reinvest it in your business or invest it in something that will grow. Do not depend fully on someone you have hired to do something for you. Make sure you know how to do it even if it’s a basic version.”

Sonia maintains a straightforward approach to manage her personal finances and those of her business. She pays herself a salary to keep that distinction. In case of accumulation of funds or receiving monetary gifts, she invests them immediately. She does not give or take loans, which she shares is a very recent improvement in her and that she has learnt to save before splurging.

With years of experience of setting up an enterprise and running it successfully, Sonia generously shares her tips for budding women entrepreneurs. She says, “Have a clear idea about your scope of work. And a tentative goal. Neither short term, nor too long term. Like a three-year goal which is not difficult to speculate or set. Write and rewrite the business plan at least 3 times for better clarity in scope of work. FAILURE in the initial stage is important so as to never become complaisant. Face it bravely. Have sleepless nights, anxiety, endless brainstorming sessions with different people who will ask you the questions you fear. Have immense belief in your idea and love your business like your child. Don’t let anyone tell you it’s not your cup of tea. Start taking your finances in your own hands and learn from scratch. Until 2015, I had never personally stepped into the bank for any bank work. I didn’t know how to write cheques or file returns. But I learnt from scratch and now even though I am not a master of it, I can do it by myself. Last but not the least, enjoy your work, and the wealth you’ll generate from it.”








All in a pot of tea.

Anamika Singh is a second generation tea sommelier who has been learning, absorbing, experiencing, creating and spreading the good word of tea for the past 30 years. She has lived her life largely in the mountains of Darjeeling & Dharamsala. Around 6 years ago, after working for a considerable amount of time with her father, Abhai Singh in the estate and exporting their teas to Europe and Asia, she decided to introduce India to fine, boutique, niche teas and thus, Anandini Himalaya Tea was born. Anandini means where the earth and the sky meet and something that gives you happiness. After two years, her brother, Kunal Singh joined the business and now they have grown as a brand.

They started with 7 blends, the tea sourced from their own estate where they worked closely with farmers and got the purest of flowers and herbs from the Himalayan region of India. They now have close to 150 different teas that include handmade teas, infusions, and tisanes and are very happy working with the hospitality industry as well as the wellness industry. They curate events and workshops based on tea and are also working with the Indian Hospitality Management institutes to teach the students about the beverage of the nation, so that each one of them can become brand ambassadors of tea.

Anamika believes that it was the obstacles in her life that inspired her to become an entrepreneur and she is glad to have chosen the path less traveled. She quotes that, “Working with my father was one thing but starting a business on my own was another ball game altogether. There was a phase in my life around 9 years ago that actually made me question my abilities, my thought process, me as a person and my responsibilities towards others who surrounded me. I had to snap out of it which I did with the support and love of my family and close friends. I just decided that I have to work harder, create something of my own, catch hold of that silver lining and begin with courage and hope and prove first to myself and then the rest, that I believed in myself, my abilities, my skills and that if the mind can conceive it, there is no way that one cannot achieve it.”

As with anyone starting out on their own, Anamika too had her fears. Her main concern was being one of the very few women in a male dominated industry and therefore, the apprehension of not being taken seriously in the business. She learnt the nuances of tea in their tea estate under the astute guidance of her father who has been her biggest inspiration, her guru and someone who always led the way for her to follow. After learning everything from scratch under him, she set up Anandini Himalaya Tea where she suspected again if the Food & Beverage industry would give her a chance as a tea sommelier and listen to her. In her opinion, tea has never been given the kind of significance it deserves and there’s very limited knowledge that people have about the different kinds of blends. This was a challenge for her as she wondered if she’d be able to hold the attention of people during meetings in the F&B industry. And this of course had a direct co-relation to how it would impact her business. Anamika quotes, “Their normal remark would be, ‘Tea is just Tea, how is yours any different?. People in India just didn’t understand the importance or the relevance of Single origin or Single estate teas. They still don’t. So it is an everyday challenge, but I love it. It keeps me going, changing one cup at a time.”

From her years of experience as an entrepreneur, Anamika shares her approach of starting a new business. She states that it’s crucial to have a business plan in place especially if you intend to create a brand. It is important to connect with financial planning organisations or government bodies that can help you register and further help you to figure out the way forward as far as finances are concerned.

She states that today it’s a huge advantage that we have accessibility to financial planning advisors, to discuss and figure out financial strategies as compared to earlier. Anamika quotes, “I think our biggest fear is of being seen as one who doesn’t know, hence we find it difficult to ask for help. But with all the infrastructure available to us today on how to take it forward, now is the best time to create your path.”

Anamika started off by putting her personal savings to establish Anandini Himalaya Tea. After a year, when she got an understanding of the market, she initiated the second phase where fresh funds were invested with the help of her family and friends to open a tea boutique and expand the market. This increased her outflow in a span of three years and as the founder/director of the business, she did not use any of the new funds for her personal use. When funds were required for expansion, marketing and new projects, they were again gathered from family and friends. She explains that they have not taken any debt from the market and Anandini Himalaya Tea is still a close family owned business. It was only since the fourth year of the business when she and Kunal have been able to take a salary. She mentions that all other profits are re-invested back into the company. They had consciously decided to not involve investing companies for further financing to keep their brand value intact.

However, she also highlights a few things that one should be cautious of while starting out on your own. She emphasizes that once you’ve established clearly what you want to do, which direction you want to take and who you want to partner with, it’s possible that somewhere along this journey you get influenced wrongly and get deviated from your core values that your brand talks about. This may all be in an attempt to reach your goals faster and in ways that might bring in the limelight quicker than expected. She mentions that it is absolutely crucial to keep going back to the drawing board and figure out where you started and how you started. She states, “Stick to the values and principles, choose your clients wisely. Be careful of how you put across your brand on social media. The world is watching. And if you are an entrepreneur, remember you reflect your brand and vice versa. Hence, with the powerful tool that the social media is, remember to keep yourself linked to the brand and see how you can reflect the best rather than give any negative impact to what you are trying so hard to build.”. Anamika personally has a checklist that she goes back to off and on. Additionally, she maintains a daily diary of her expenses and has a personal CA who helps her with her investments and to keep a reality check on her personal finances as well as that of the business.

When asked about her success mantra, Anamika generously shares her thoughts with us. “Believe in yourself. Remain true to yourself and be you… Bravely! You are responsible for creating your path the way you want it. Listen to your heart and follow your dreams. There is no way that they will not manifest! Do not rush into anything without having done your homework. And in this entire process, do not forget yourself and the time you need to give to yourself. If you grow, your mind breathes and then your brand grows. Take out ‘me time’ always even if it is for just 30 minutes in a day. Spend time in solitude. It has helped me so many times when I was caught in a road block. Build a network of people who support you and believe in your dreams and last but not the least, stay away from negativity. Your time is precious. Respect it. Life is beautiful, we just have to learn to savour it sip by sip.”









There’s a new Spice Girl on the block

This one is not to be confused with the famous girl band from the 90s. Singapore-based Namita Moolani Mehra is a mom of two and is the founder of Indian Spicebox. Her brand is about enabling families to eat more wholesome home-cooked meals, including healthier versions of restaurant favourites. Simple recipes are packaged with wonderful organic spices that provide not just amazing flavour, but great health benefits as well. The best part is that for each Spicebox Kit she sells, 10 street children in India are fed a hot meal. Namita states, “We have funded over 60,000 hot meals and our goal is to provide 1 million meals by 2025.”

Namita is also a writer and has published two cookbooks out of which one is a children’s book published by Scholastic. She also writes for several online publications including Sassy Mama. She founded Indian Spicebox a few years ago after spending 15 years in the corporate world, primarily working as a digital strategist at ad agencies in New York after which she spent five years at Facebook in both New York and Singapore. Indian Spicebox was born as an idea in 2004 when she was living in New York and surrounded by friends asking her for recipes and information about spices. It wasn’t till a decade later that she quit the corporate world and founded it as a business.

Namita’s drive to make a difference was her main inspiration to become an entrepreneur. She wanted to give back and do something with meaning and purpose. Therefore, by creating something of her own that would be purpose-driven and make her feel excited about getting out of bed, she wanted to put her strengths in service of something meaningful. After working at one of the world’s best companies (Facebook) with the most incredibly talented people, and supported by tremendous resources, she was afraid of going off on her own. She was worried about not having the teams and resources to keep her motivated and productive.

A year before starting her own business, Namita worked for a VC (Venture Capital) firm which was an eye-opening experience for her to a great experience. It gave her a good understanding of the start-up world and financing better. “Frankly, I had no clue about funding businesses and there are a lot of different routes and options out there for founders and small business owners. It is really important to know your options, network with other business owners and founders, attend start-up conferences/events, read the blogs, soak up as much information as you can and also consult financial planning advisors to get a clear understanding of that part too.” says Namita. She invested her own savings from her previous jobs and advocates engaging financial advisors and companies who can help to manage money and investments for you on the personal front and for the business.

There are several things one should be aware of while starting on their own. Namita shares a few from her experience, right from being prepared to feel alone, to being constantly in battle mode to ensuring that you hire and delegate early-on. Hire interns and invest in a good
website developer and designer. She also emphasizes to take the time to create and build a solid brand right at the onset (as all touchpoints matter) and most importantly, investing in quality.

Amongst other things, Namita also highlights that it’s important to surround yourself with people you trust. She states, “If you find good partners, vendors, interns, freelancers—hold on to them and keep investing in good people. Also, build a solid brand upfront. Invest in good designers, brand building experts and digital experts who know how to present your brand and offering via critical touchpoints. Have several mentors or your own personal board of advisors – the people you can trust and use as soundboards. Work with a professional coach. I’ve been working with a coach for over five years now and she anchors me tremendously behind the scenes. As I’ve mentioned earlier, engaging financial advisors to keep you on track with your money management is also crucial. Remember, you can’t succeed alone. So, the people you surround yourself with, are the ones who will ultimately determine your success.”






Love at first sight!

Rucha Mulay, founder of R Pilates Studio in Pune is also the pioneer of equipment Pilates in the same city. Having flown for British Airways as an international cabin crew for 10 years, Rucha’s love for Pilates was a discovery during one of her trips to London that set her on a journey from where there’s no looking back. She was introduced to Pilates by a friend on that trip and says that it was love at first sight for her. She began frequenting the studio as it was healing her backache and soon she decided to bring Pilates to Pune.

After relinquishing her flying job, she enrolled herself for ACSM CPT (American College of Sports Medicine) then did all her Pilates certifications one by one. In 2013, Rucha started teaching mat Pilates classes at a gym and also started personal training at home. In 2014, she started her own Pilates Studio, R Pilates in Pune with only 1 reformer in a small apartment in her parents’ building. Today, she has a beautiful 1000 square feet studio in the most plush area of Pune with all the Pilates apparatus imported from Sacramento, California and a big family of 6 Pilates teachers, 150 clients and another branch opening soon.

Rucha’s inspiration to become an entrepreneur was her passion for fitness and Pilates. She believes that Pilates changes lives and she wanted her Pune people to have access to that through a dedicated studio in the city. As someone who doesn’t come from a business family, she was apprehensive about a few things while starting out. Return on investment, being a critical factor. Having invested a substantial amount in education and equipment, her fear was whether Pune people would be willing to pay the kind of money Pilates trainers charge in Mumbai.

Taking baby steps in the beginning, Rucha started on a very small scale where the overheads would not leave her restless. Initially, she invested some savings of hers from the British Airways job and her husband helped her too. She specifies that she didn’t take any loans. She gradually started adding equipment to the studio and when she felt the need to scale up, she calculated her figures, did a lot of homework and then made the move. The overheads were going to be 10 times more but the way their work had increased, she was confident that they would do well. “I had a very clear picture of our business in my mind.” states Rucha.


Having landed firmly on her feet with her venture, she shares her approach with us. “If you know exactly what you want to do, start small, watch the response, make your mistakes and learn your lessons in a small set up. Once you have tested the waters then dive in into the big pool. Always count your figures backwards. Give your business a strict teething period and make sure it picks up pace gradually. Set goals and talk to your team regularly.” While starting a business or even while scaling up, we know that finance is the key component. Since personal savings become a big part of investment in it, it is quite natural for one to experience that they are low on that reserve for a while. Rucha experienced the same after moving to a bigger studio where her overheads increased manifold and her personal savings took a back seat. However, she continued with her basic savings like PPF and left them untouched. Now that the new set-up too has been established well, she has been able to focus better on building up that reserve for her personal savings and has defined separate financial goals for herself and R Pilates where she has started two separate SIPs for future capital investment and her own retirement.

Rucha shares some wisdom nuggets generously for budding women entrepreneurs. “Unless you dive in, you are not going to be able to show your swimming skills. But do not dive in if you don’t know how to swim well as just moving your hands and legs in water won’t take you to the shore gracefully. Know your capabilities, know your limitations, work around them, have a plan B ready always and don’t think mediocre. Think big .”



PPFAS – CAGRfunds conviction recommendation

PPFAS Fund Report

Parag Parikh Long Term Equity Fund (PPLTE) is the only equity fund that is managed by the investment team of PPFAS. As a recent entrant in the Mutual Fund Industry (fund was launched in May 2013), it is not the most popular fund in the market. At least we do not see people including them in the “Top 10 Funds to invest in 2019” list (Frankly, we find such lists to be very silly).

There are several reasons why we believe that PPLTE is a good addition to the portfolio for investors who exhibit all of the following traits:

a) Looking to add equity exposure
b) Willing to not withdraw their investments for 7-8 years
c) Keen to add some overseas diversification to their investments
d) Unwilling to risk capital erosion in lieu of high returns
e) Want to prioritize downside protection for times when markets don’t seem to be too ecstatic

If you think you are the one we are referring to, you should contact us to check if this is a worthy addition to your existing portfolio.

Reasons why we like PPLTE

Sector Allocation

PPFAS Sector Allocation

Several things stand out when we look at the sector allocation of this fund.

a) 22% of the corpus is kept in liquid resources, waiting to be deployed when opportunities emerge. Some might say that this will drag returns down (since liquid resources at best earn you around 6-7%), but let us tell you that investing in businesses at a price that seems affordable is better than buying something expensive. Also, investing when one finds good businesses to invest in is also an important consideration for long term wealth generation

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price” – Warren Buffet

b) Substantial overseas exposure (~28%) adds to geographical diversification (orange bars are completely overseas). Out of this total overseas exposure, around 9.7% is in Google and 4.3% in Facebook. That adds to some real diversification to your portfolio! (Source: PPFAS Feb – March Factsheet)

Skin in the game

7.07% of the AUM represents own equity of the key persons in the fund management team. When people who are managing our funds have invested their own savings into the same, we know the commitment is for real. It is a good corporate governance practice to have their own financial being is linked with that of the investors. We give them a big thumbs up for this one.

Out-performance with focus on downside protection

As can be seen from the chart below, the fund has outperformed its benchmark (Nifty / BSE 500 TRI) at all times considering point to point returns. In terms of Alpha, the fund ranks #2 within the Multi-Cap category. PPFAS Performance comparison

However, out-performance is not what excites us. Active funds, after all, are supposed to out-perform their respective benchmarks.

What seems interesting and commendable to us is the ability of the fund to protect the downside during times of correction. Let us look at the 3 year rolling returns of the fund. The highest rolling return is 25% and the lowest that the fund has given over a 3 year period is 10%.

PPFAS Rolling Returns

This means a lot of things for you as an investor if you would have held your investment for a 3 year period at any point in time:

a) You would have generated a CAGR of at least 10% even if you would have exited at the very low point of the market which was some time in the second half of the last year

b) You would not have seen a negative return for a 3 year period on your portfolio EVER

c) You would not have lost your peace of mind over losing your money

For investors who are uncomfortable with too much volatility, the above means a lot. We believe that the reason the fund has been able to demonstrate this performance is because of its patient and down to earth fund managers – Rajeev Thakkar and Raunak Onkar. Although this is not a guarantee for the future, the above track record during testing times gives additional comfort to investors.

Mr. Thakkar is quite active on twitter and we suggest you follow him to understand his ideology if you are an existing investor or are likely to become one.

In case you have any further query, do reach out to us on

Do health insurance plans cover maternity expenses?

Maternity health insurance

“Maternity Plans” are not really separate plans. It is a feature which may be covered under normal health plans. However, only a few health plans offer maternity cover as part of their normal health plans.

Key features of maternity cover are as follows:

  • There is usually a separate waiting period for maternity coverage – This means that any claims with respect to maternity will be catered to only after the maternity specific waiting period is over
  • Almost all plans have an upper cap on the amount of expenses that will be covered – Usually the coverage ranges from INR 25000 – 50000 per delivery. The reason most policies have an upper cap is because the number of claims for maternity is likely to be very high. The purpose of Health Insurance is to protect you from any sudden outflow of funds due to a medical emergency. The occurrence of maternity is almost certain and hence a limit on the same is warranted
  • Pre – maternity costs are generally not covered – Most plans which offer maternity coverage generally do not cover any expenses that are incurred towards consultancies and tests
  • New born coverage – Generally, the new born baby is covered till the end of policy year

Should you buy a health plan only because it provides maternity coverage?

Maternity should ideally be treated as a bonus option. The overall decision behind buying a health plan should ideally be the key features which are relevant for any kind of hospitalization. Imagine a plan providing good maternity coverage but having a claim settlement ratio of 70%. Therefore, choosing a plan just because it provides maternity coverage may not be the best decision to take.

However, in case you have a choice between two equally good plans with one of them providing maternity coverage with or without some extra premium, then it might make sense to take the plan with the maternity clause. Especially, if you are planning a kid in next few years.

Want to discuss more on maternity plans? Write to us on

Have you read about our Cancer Plans?