In this edition of the reader story we meet a geophysicist who shares his 25-year journey to financial independence that started with recurring deposits.
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 and 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. Now, over to the reader.
My name is Prakash, and I am 48 years old, married with 2 kids (16 and 13 years). My first experience with financial planning started way back in 1998 when I started working in one of the major IT companies from the campus. My father, a professor at Delhi University with very little financial awareness apart from the regular instruments like bank, post office, etc., advised me to start an automatic monthly RD. I invested around 25% of my net pay, as I was staying home and had very few expenses.
In a year, I saw a good amount sitting in my bank balance, and as luck would have it (as was the case at that time), I was sent to the US for work. My father had started investing some money in company FDs. He suggested that I write him some blank cheques every month, and he can invest on my behalf since I would not need the local salary deposited in my Indian bank each month by my company.
Until then, I had only seen the magic of saving regularly and had no particular interest or knowledge of how investments worked. I came back after a year to see that my investments nearly gave a healthy 20% ROI! (it was the pre-2001 era; those old enough can understand the market frenzy at that time). Luckily, my father had taken my funds out and not reinvested them.
He eventually lost money on some of his own investments when he tried to replicate the same around 2003. However, I was fascinated by the ups and downs of the financial market and was eager to see how best to invest more. Still, I did not know how to go about it – there were no AIFW (Facebook group, Asan Ideas for Wealth) or SEBI registered planners at the time.
In the meantime, I moved to Bangalore for another job and met my now-wife there, who came from the world of startups. She introduced me to an ex-colleague who started his investment management company after being fired from the startup. This was 2002. (this firm is now fairly large and has a well-established presence in major cities in India).
I started with a very modest SIP of around INR 10,000 per month, and of course, we did not do any financial planning formally, but the goal of savings for the future was well understood. We got married in 2003, and we first entered the world of financial planning in 2004 when we went abroad again and decided to plan our financial goals for the mid and long term. At that time, retirement and long-term goals were still far-fetched.
I had already bought my first apartment and had a car, so the usual goals seemed fulfilled. My investments then were predominantly MF (60-70% Equity and Balanced, and the rest were Debt). At that time, the investment management company started toying with the idea of direct equity trading on behalf of the clients.
I still did not pay enough attention to educating myself – partly because there were no easy ways to learn, and the financials and the markets were like Greek and Latin for a Geophysicist like me.
We returned to India in 2006 when I switched jobs again, and this time, I got a good raise. Luckily, I always had the habit of increasing my savings every time I got a bonus or a raise. Till 2010, my average annual savings were around 30% of my net pay, and I also had a decent market return -around 18-20%. In the meantime, we had two children, and I also did an executive MBA. At this time, we also started actively looking after our health – I trained to run marathons and ran many of them in the next few years, and my wife started a fitness program with a startup gym. We started nutritious and conscious eating as well.
In around 2012, we decided to make a proper financial plan again, and for the first time, I aspired to reach some long-term goals – like retirement, children’s education, etc. But I soon realised that I might never be able to attain these + other goals unless some miracle happens or we significantly improve the earnings. As luck would have it, we moved to the Middle East in 2013, providing an excellent opportunity to start saving for the future.
I also started taking an active interest in investing by reading Benjamin Graham, and I was fascinated. Armed with my MBA knowledge, I started looking closely at the markets, businesses, etc, and I was able to engage meaningfully with my financial advisor. In the next 3 years, I reached around 65% of my retirement corpus (which was based on 2012 figures)! Naturally, I was pumped about this, and for the first time in my life, I felt major goals could be reached.
Around 2015, we had a close encounter with the dreaded C, and we managed to navigate 1.5 years of treatments, etc. The cost of treatment in a private room is nearly 3-4 times higher than that in a general ward. You realise that you reach a point when you need better privileges, whether it is being treated in a private room with Wi-Fi or buying smartphones, going on foreign travels and so on. Thankfully, I had complete insurance coverage from my employer. I also had two private health insurance – which I did not have to use.
Having realised the importance of healthcare and its potentially huge costs, I decided to continue my private insurance policies for a couple of reasons – in case of some contingencies like a sudden job loss and the high cost of buying a fresh policy in your 40s and 50s.
We also had to look at our life goals in the light of healthcare and lifestyle inflation. After all the planning, it was clear that we still had a long way to go!
In 2016, I allocated around 10% of my corpus to a fund for startups as an experiment as I felt I had some appetite to increase my risk and joined the bandwagon. Please note that all these investments were made through our financial advisor company that belonged to our friend. Now, I was part of his circle, where he would openly share the risks and opportunities of some unique investment ideas, even investing his own money in many cases.
Around 2016, we moved to Denmark, which posed a new challenge due to the notional tax on MF. I had to liquidate all my MFs and gradually moved to PMS as they were the only equity-based instruments offered by my advisors. My previous attempts at trading in the markets proved to be a failure since I was inconsistent and didn’t have the time to invest in this pursuit.
Fast forward to 2023, when we have moved to 3 more countries and have been in Uganda for the last 2 years. Our investment journey has been varied and enriching based on the opportunities available and the taxations we were subjected to (DTAA, ease of administration of DTAA, best tax regime, etc). Since 2016, I have gradually moved most of my investments outside India to diversify and make it easier to administer.
In more than 25 years of my career, I have actively invested for around 23 years and the last 22 years have been with the same planner. I have/had investments in the following:
- MFs
- Direct Equity
- Fractional RE
- PMS
- Alternate investments – Startups, debt, etc
- Index investments both in India and the US
Around the COVID years, I realized that I had achieved FI. Initially, I was very elated and started reading about all kinds of FIRE stories and started dreaming about all kinds of things I could do instead of working in a 9 to 5 job (teaching Physics to teenagers- although my daughter disagrees with this choice having been at the receiving end of my teaching), travel the world and so. However, I soon realized that I enjoy my work, where I get lots of leisure time and holidays to pursue my passions. There is no reason to retire (at least not yet).
Snapshot of where I stand today in terms of goals.
| Goal | Current Situation |
| Year of survival assumption | 100 |
| Debt | 0 |
| House to live | Yes |
| Retirement | 70X |
| Higher education goals (assuming UG/PG abroad) | 100% |
| Contingency | 20X |
| Health insurance | 2 active policies + 1 super top up |
| Others like home renovations, cars, etc | 100% |
| Contingent situations like school fees (international school) due to job loss | 100% |
| Will | Not yet (but I plan to close it soon) |
Investment instruments summary (approximate split)
- Debt MF 5%
- Banks/PPF etc 5%
- Company Retiral funds 15%
- Equity MF 10%
- Equity PMS 30% Slowly moving to MFs and other alternatives
- Index investment 20% Combination of debt, gold and equity
- Debt Alternate funds 10%
- High-risk Investment – Startups etc., 10%
In all these years, I realised that financial independence is linked closely to life and our outlook. Here are a few things I have learnt, some of it the hard way:
- Life experiences, whether travel, being with family/friends, etc, are very important. Focus on them.
- Focus on health – it should be our topmost priority. I have run marathons, ultra marathons (50kms), switched to cycling, tennis, gym, boxing – anything to keep my mind and body in top shape. I can’t stress enough how important this is.
- Financial independence and goals are personal; be sure to discuss and agree with near and dear ones. No two situations are alike.
- Persistence and Diversification are the only ways to achieve better financial outcomes. Use all the resources available today to your advantage. Start early and seek help from a planner, and at the same time, try to increase your awareness.
- Develop a passion – It could be anything – music, reading, a sport. It would be something to keep yourself engaged, active and happy.
- Above all, don’t make money the only goal in life.
I have left out any references to returns as I feel they are meaningless in the long term, and a more relevant goal is whether you are meeting your objectives. Everyone’s journey is unique; ultimately, we must travel our paths to reach our destinations.
I have benefited by starting early, not dipping into my corpus for any unforeseen needs and luck – I started when India’s growth story was starting and short perturbations like 2008/2014 or Covid did not impact me as much.
I hope this can inspire you to work towards your own goals and achieve them. Good luck!
Reader stories published earlier:
As regular readers may know, we publish a personal financial audit each December – this is the 2022 edition: Portfolio Audit 2022: The Annual Review of My Goal-based Investments. 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 freefinc`al AT Gmail. They could be published anonymously if you so desire.
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Dr. 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 ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, 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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