How a taxi driver saved ₹10 lakh in a decade with ₹4,000 SIP

One day, in a casual chat, the taxi driver told Tonagatti that he wants to save for his daughter’s studies and marriage and asked him for advice. The driver could spare ₹4,000 every month for the investment.

At that time, Tonagatti had recently got his mutual fund distributor license. He helped the driver invest in HDFC Top 200 Fund (now HDFC Top 100) and Reliance Growth Fund (now Nippon Growth Fund). The two funds were top-rated schemes at that time.

“While I explained to him how mutual funds and systematic investment plan work, he didn’t understand. He was just concerned if they are good investment avenues. I told him that they are the best if he is discipline. That struck a cord,” said Tonagatti.

In the past 10 years, every 2-3 years, the driver would visit Tonagatti and ask for his investments’ current value.

In the past decade, the taxi driver invested ₹4,69,998, which works out to be ₹3,916 a month. He has now managed to accumulate ₹9,87,987 corpus. He made an annualised return of 14.78% on his investments.

“Small investments hold big potential. But many are not discipline. This old ‘client’ was uneducated. He doesn’t understand mutual funds, and therefore, was not bothered about market movement. The funds were top-rated at that time. But they have been average or under-performers for many years now. The thing that worked in his favour was discipline,” said Tonagatti.

After becoming a Sebi-registered investment advisor, Tonagatti referred him to another fund distributor.

If Tonagatti would give the same suggestion now, he would instead use index funds than actively managed schemes.

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