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I lost six months’ income in F&O and ditched it for systematic investing


In this edition of the reader story, we meet “RK”, who discusses how he lost six months’ income in F&O over a span of three months and then traded it for systematic investing.

About this series: I am grateful to readers for sharing intimate details about their financial lives for the benefit of readers. Some of the previous editions are linked at the bottom of this article. You can also access the full reader story archive.

Opinions published in reader stories need not represent the views of freefincal or its editors. We must appreciate multiple solutions to the money management puzzle and empathise with diverse views. Articles are typically not checked for grammar unless necessary to convey the right meaning to preserve the tone and emotions of the writers.

If you would like to contribute to the DIY community in this manner, send your audits to freefincal AT Gmail dot com. They can be published anonymously if you so desire.

Please note: We welcome such articles from young earners who have just started investing. See, for example, this piece by a 29-year-old: How I track financial goals without worrying about returns. We have also started a new “mutual fund success stories” series. This is the first edition: How mutual funds helped me reach financial independence.

My introduction: I am RK(Friends and Colleagues address me like this). I am 26 years old, Happily Single😊. I have completed my B.E and M.Tech in different Top Tier colleges in Bengaluru, started my professional journey in a European-based Semiconductor Industry and continuing in the same.

My monthly expenses are hardly 5% of my income as I am staying with my parents(Own House), and my elder brother pays Electricity Bills, Internet Bills and other house maintenance charges. I am more interested in Personal Finance and will love to read related blogs. Gained more attraction during Covid Lockdown – Special Thanks to Spotify Podcasts such as ‘The Investor’s Podcast’, ‘Paisa Vaisa with Anupam Gupta’, ‘Money Control Podcast’, YouTube videos from Subramoney and Pattu Sir and witty comments along with financial advice to other people queries from Ashal Sir and Sayan Sircar of Asan Ideas for Wealth in Facebook, enhanced my interest in finance.

My liabilities are ZERO which is the biggest boon for me so far. No Credit Card Debt, No Emergency, No EMIs etc., As soon as I received my first salary, I checked for the ‘AIFW Checklist’ and ‘Freefincal Checklist’, and this is the current scenario.

a) Have Term Insurance of 3.25 crore(2.5 crores from Max Life and 75 lakhs from Kotak). Planning to double this once I get married.

b) Have Health Insurance of 18 lakhs(8 lakhs from Organization and 10 lakhs from Bajaj Allianz). Planning to double this once I get married.

c) Have Personal Accident Insurance of 20 lakhs(From Bajaj Allianz)

d) As monthly expenses are low, I haven’t set up a separate emergency fund. However, as a thumb rule, the savings account will always have 10-12 months’ expenses.

My Portfolio: Since the beginning, I have been heavily inclined to invest, which made me want to invest in anything and everything(Thank God I Didn’t explore Crypto). As usual in the investing journey, I started trading in F&O without knowing it(First mistake). This was during April 2021. I started purchasing random puts and calls from the Twitter “Gurus” recommendation every other day.

Some days were profitable, but most days were in loss. Brokerage costs were like salt in a wound. As part of a quarterly portfolio check, I was shocked when I saw the loss I had incurred. Because I had spent my ~6 months’ income in those three months. I stopped F&O immediately and started investing in direct stocks and mutual funds.

As all advisors say, Goal-Based Investing is better; I have marked my goals. However, I could not link the funds for the specific goals(Second mistake) I will be taking the help of Freefincal’s Fee-Based advisors in the next couple of months. Not explored PPF, Real Estate(Third Mistake???).

Currently, my assets are as below:

a) Equity : 3 Stocks would be purchased as SIP every 15 days. Rest ~10 stocks will be purchased when there is more than a 5% dip in the respective share price.

b) Mutual Funds : 4 Funds(1 Index Fund, 1 Technology Fund, 1 Focused Fund, 1 ELSS) would be purchased as SIP every month. A Balanced Advantage Fund would be purchased when its NAV is increasing every 5% or in every quarter, whichever comes first.

c) SGB: I have purchased 1 issue with 50 units.

d) EPF and VPF: Company gives EPF. I have asked the Company to deduct 10% Basic as part of VPF.

e) ESPP: I have opted for the Company’s Employee Stock Purchase Plan. Every month roughly 25% Basic would be deducted from payroll, and at the end of every six months, the stock would be purchased in our name with a 15% discount. This is US Stock.

f) Physical Gold: I have purchased 100 gms Gold Bar(Mom pressure!!!)

g) Fixed Deposits: Have one FD with 24 months’ monthly expenses. Also, have a daily minimum savings pot converted as FD in IndMoney. I started recently with no idea of how this is helpful(Fourth Mistake).

h) NPS: Started in Jan this year to save taxes(Fifth Mistake). However, later found that the company had Employer contributions, which can help save taxes(No??). The company deducts 10% of Basic from the payroll every month.

i) US Stocks: 1 Monthly Dividend Stock and 1 Quarterly Dividend Stock is purchased as SIP monthly from IndMoney. All dividends get reinvested. I stopped a couple of months because of some RBI regulation and 20% TCS havoc. Restarted it again this month.

Every year as the hike would be good and also bonus would be rewarded, the Direct Stocks SIP and the Mutual Funds SIP would be increased. Proportionately, VPF, ESPP and NPS will be increased yearly with no intervention of mine. However, I should take care of rebalancing my portfolio regularly.

Sometimes, a thought comes to my mind that I am over-investing(Sixth Mistake??). Still, when I look at the portfolio immediately after the thought, my goals come to mind, which makes me remember the following quote by Robert Kiyosaki -> “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

Thanks for reading till the end of my financial journey. See you all in the next audit – July 2024!!! Hopefully, a couple of mistakes mentioned in this audit would be rectified. Happy Investing!!!

Reader stories published earlier:

As regular readers may know, we publish a personal financial audit each December – this is the 2020 edition: How my retirement portfolio performed in 2020. We asked regular readers to share how they review their investments and track financial goals.

These published audits have had a compounding effect on readers. If you would like to contribute to the DIY community in this manner, send your audits to freefincal AT Gmail. They could be published anonymously if you so desire.

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About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.


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