The Day My Friend Lost ₹3 Lakhs, And What We Did About It

Last year, my friend Ravi came to me, eyes wide with worry. He’d just sold a small side-business, pocketed about ₹5 lakhs, and asked me: Arif, what should I do with this money? I want to invest, grow it, maybe buy a house someday. 

We sat down one evening, tea steaming, and I asked him to walk me through his plan. Ravi had already opened a mutual fund SIP, but he’d also parked ₹3 lakhs in a fixed deposit just to be safe.

Safe isn’t always smart, I told him. And that’s when the trouble began.

The First Mistake: Safety = Zero Growth

Ravi had put most of his money in fixed deposits because he thought they were risk-free. He felt secure, but the interest rate was just around 5 % and inflation was eating away more than that. Over three years, the real growth of that ₹3 lakhs might actually be negative once inflation, taxes, and opportunity cost were factored in.

I asked him: If inflation is 6 % and your FD is giving 5 %, how much are you really earning? He realized he was slowly losing purchasing power.

The Second Mistake: Neglecting Asset Allocation

Ravi’s SIP was invested entirely in large-cap equity funds. That seemed safe to him, but it exposed him to equity market volatility without any diversification. When the markets dipped, his investment dropped by 20 %, and he panicked and withdrew. He lost not just money but confidence.

I showed him how we could rebalance: part equity, part debt (or safer debt-funds), part short-term liquid instruments, depending on his horizon and risk appetite.

The Third Mistake: Ignoring the Emergency Fund

At a critical moment, Ravi’s old car needed major repairs, and he didn’t have a contingency fund. He ended up borrowing ₹50,000 at high interest. That wiped out any returns he had managed to eke out.

We built a safety net: three to six months of expenses parked in a liquid, easily accessible fund. Suddenly, Ravi felt calmer, and didn’t have to touch his investments when life threw curveballs.

The Fourth Mistake: Under-insuring the Downside

Ravi believed nothing bad will happen to me. Until his younger sibling fell ill, medical bills piled up, and suddenly the family finances were strained. He’d skipped proper health insurance, thinking, I’m young and healthy.

I helped him run the numbers: the cost of an affordable health insurance policy versus the risk of a catastrophic medical bill. We structured a strategy so that his downside risk was covered, freeing him psychologically to focus on long-term investing without fear.

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What We Did, What Changed

Here’s the turnaround:

1. We moved ₹2 lakhs out of the FD and split it into a mixed portfolio a portion in equity SIPs, a portion in debt funds, and some liquid cash.

2. We built an emergency fund of ₹1 lakh (three months of his basic expenses) parked in a liquid fund.

3. We bought a decent health-insurance plan and reviewed his other risk exposures (such as life insurance).

4. We set up a small recurring monthly voluntary savings habit ₹5,000 every month to build a buffer for future opportunities or early real-estate down-payments.

Six months later, Ravi emailed me: I feel calmer. I’m not chasing returns anymore, I’m building strength. And in the last three months my portfolio is up 8 %, and I haven’t panicked once.

He told me he finally slept easier at night. That’s real financial progress.

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What This Really Means

If you’re investing money today, ask yourself:

• Am I trading safety for stagnation?
• Do I have a diversified mix of assets, or am I riding all my bets on one vehicle?
• What happens if something unexpected goes wrong is my emergency fund ready?
• Would a sudden medical crisis derail my financial future?

These hidden mistakes are surprisingly common, and surprisingly damaging but the good news is they’re fixable.

If you’d like help reviewing your portfolio, building a safety net, or structuring a resilient investment plan, I’d love to help.

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Want to Start Building Real Financial Strength?

If this story reminded you of your own money struggles, don’t just stop here. Share your thoughts in the comments I’d love to know your perspective. And if you’re wondering whether you’re making similar mistakes, take the next step. You can click the link to book a free one-on-one appointment with me, or simply connect with me on WhatsApp for a quick chat. Sometimes a single conversation can change the way you handle money for life.”

Let’s build your financial peace of mind together.

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