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.
I’m a 25 yo software engineer following you from 2020 covid times. Starting from your Re-assemble to your goal based excel sheet creation, everything was very relatable and very easy to follow and make use for ourself. I myself have created a couple of goal based sheets for myself and have been investing based on it for the past 3 to 4 years.
During this small inconsistent journey, which I started in direct stocks, with no idea, investing one day and watching the ticker at daily morning bell, and selling soon after seeing some loss or few thousands profit, I didn’t even know what I was thinking doing that. And then slowly stopped direct stock investment(even though I’ve one in loss in my portfolio, which I don’t know if it is okay to book a loss and come out or should I wait for it to breakeven.
The loss is around 20 percent of my unrealised profits of my entire portolio. So haven’t bothered much. But need some ideas on it.), and started mutual funds investment after reading your articles. Even in that, I wasn’t great. Started for tax saving in ELSS, slowly moved to midcap and small cap funds, and now nearly have around 10 funds in my mutual fund portfolio.
After recently reading your articles on index funds, and your caution on small cap funds, i’m looking to declutter my mutual fund portfolio and go with only these 3 funds.
1. Large Midcap 250 index fund – 45%.
2. Midcap 150 index fund – 30%.
3. Nifty 200 momentum 30 fund – 25%.
The reason i’m going with a Large midcap 250 instead of a nifty 50 and next fifty against your recommendation is I’m seeing for a similar volatility 250 index has performed largely better than nifty 50. And midcap 150 and momentum is to just give a boost and also have large time for my goal.
I also contribute to my EPF at the required 12% of basepay, maxing out PPF, and to my NPS(Currently only my contribution, just for tax purpose – but a part of my retirement goals is expected to be fulfulled by NPS. Earlier my previous organization was doing a corporate contribution too, but my current org doesn’t, hopefully it does in future and saves tax and help my retirement goals faster).Two goals I’ve mentioned earlier are my retirement and house.
For retirement, I’m considering EPF + Part of my mutual fund + NPS as my investment option. I’m keeping my EPF as a debt allocation, and a part of my mutual fund is considered for equity allocation. Also, I’ve created an AUTO choice NPS contribution with aggressive investing, where the portfolio rebalances automatically on each year according to that period’s allocation set, and as I reach certain age the allocation itself changes from agressive to slowly concervative, which I see as a great hassle free equity + debt investment option.
For the second goal, I’m considering PPF + another part of my mutual fund as my investment options. I’m maxing my PPF account as debt allocation(not really for 80c purpose, honestly considering PPF as a safe + tax free debt instrument), and another part of the mutual fund contribution is considered for equity allocation.
The contributions I make to these equity and debt have been roughly allocated around as 65 – Equity/35 – Debt for each goal.
In this journey I’ve tried to squeeze out some amount every month towards my emergency fund.
Talking about insurance. Relying only on corporate health insurance for me and my parents for now, and planning to buy term for myself and health for my parents.
Parents are considering buying a land as an investment option on my name with the all my current investment and funds I’ve for emergency. I also think, this can be helpful to build a retirement house down the line. Don’t have plan to retire in metros.
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 freefincal 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(X), 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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