We recently interacted with a large client having an investible corpus of roughly Rs 10 crores. The client was struggling with two major concerns:

- Large annual tax outgo

- Lower portfolio growth because the entire corpus was invested in low-return fixed deposits

Our advice and value addition were simple, practical and measurable.

1. Tax Efficiency

  We recommended moving a substantial portion of the funds away from traditional fixed deposits into more tax-efficient mutual fund structures.

The objective was to ensure that annual taxable income from FDs and other sources remained below roughly Rs 12 lakhs, thereby bringing annual taxation close to nil, compared to the earlier tax outgo of nearly Rs 20 lakhs per annum.

For perspective:

- Rs 10 crores invested entirely in FDs at 7% p.a. generates annual income of roughly Rs 70 lakhs.

- At a 30% tax bracket, the annual tax outgo itself becomes approximately Rs 21 lakhs.

2. Better Growth Through Proper Asset Allocation

  The portfolio was then balanced across:

- Fixed deposits for safety and stability

- Debt mutual funds for liquidity and tax efficiency

- Equity mutual funds for long-term growth and inflation protection

The final allocation arrived at was approximately:

- 50% Equity

- 50% Conservative investments

This structure ensured a healthy balance between:

- Capital safety

- Liquidity

- Regular income

- Long-term wealth creation

Based on historical data and reasonable long-term assumptions (without any return guarantees), the expected portfolio growth potential improved from roughly 7% p.a. to nearly 10% p.a.

An additional 3% annual return on a Rs 10 crore corpus translates into approximately Rs 30 lakhs extra returns every year.

3. Lower Product Costs

  By avoiding unnecessary layers of commissions, distribution costs and expensive products sold through agents, brokers and bankers, the client could potentially save another 1% annually in product costs.

On a Rs 10 crore portfolio, that itself is another Rs 10 lakhs saved every year.

Overall Financial Value Addition

- Tax savings: ~ Rs 20 lakhs p.a.

- Additional growth potential: ~ Rs 30 lakhs p.a.

- Lower product costs: ~ Rs 10 lakhs p.a.

Total potential financial value addition: roughly Rs 60 lakhs annually.

Our quoted advisory fees for the same engagement were approximately Rs 2.50 lakhs plus GST — translating into nearly 24 times the fees in potential annual financial benefit.

More importantly, we assured the client that the transition would happen gradually and comfortably, because at the end of the day, clients are human beings, not machines. Financial transitions need patience, understanding and handholding.

We ended the discussion with a simple thought:

“Every single day of delay roughly translates into an opportunity cost of nearly Rs 15,000.”

Happy Financial Planning!

Naveen Julian Rego – CFP®

MD & Principal Officer

Naveen Rego Capital

SEBI Registered Investment Adviser

Reg No: INA000019211

BSE Membership ID: 2178

Disclaimers:

1. Investment in the securities market is subject to market risks. Read all the related documents carefully before investing.

2. Registration granted by SEBI, membership of BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

3. Financial products recommended by us which are under the jurisdiction of other regulators are beyond the scope of SEBI’s grievance mechanism.