Last Updated on August 10, 2024 at 9:30 am
In this edition of the reader story, we once again meet a software engineer we met three years ago when he started goal-based investing. Now his portfolio has just crossed one crore.
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.
Hi all, I just wanted to share an update on my story, which was published earlier. Please read it first before continuing here: From Fixed Deposits to Goal-based investing in MFs: My Financial Journey
Updates since my story got published in freefincal :
1. I upskilled and switched to a better-paying job.
2. Bought Individual Term insurance and Family floater health insurance plans. (Apart from company provided plans)
3. Emergency fund : 1 month of expenses including EMI in a savings account. 5 months of Expenses in a liquid fund with an insta redemption option.
I got a pay hike of 50% when I switched my job.
With this hike, I aggressively increased my savings rate but my expense rate increased only a little bit. I like to live frugally but I am not forcing my wife and kid to follow the same. So, I spend for their wants (I allocate a separate budget for that, though 🙂 ).
This year my home loan tenure ended. So I started investing my home loan EMI amount towards my retirement goal and child education goal.
My portfolio as of July 31 2024 :
Retirement Goal: I have accumulated 1.2 crore for my retirement goal which is 16x where x is my current year expenses. Plan is to achieve 50x as soon as possible by increasing my savings rate every year.
For equity, I invest in an active flexicap fund, debt portion includes dynamic asset allocator mutual fund, EPF and PPF.
Current asset allocation : 62% Equity 38% Debt
Target asset allocation for this year : 58:42
Every year I reduce my target equity allocation by 2% and rebalance it every year in April.
I rebalanced to the target allocation in April this year. Looks like i need to rebalance it again this year due to market conditions.
Child education goal:
Current asset allocation: 75:25
Target asset allocation:70:30
For this goal I invest in the same flexicap fund and DAAF (different folio).
For this goal, I am not doing asset allocation regularly. I rebalance it whenever the asset allocation crosses 10% more than the target.
Conclusion: If you see my last post in 2021. I had 8x for my retirement. In the last 3 years i have increased it to 16x. It is not only due to the returns but is also due to my aggressive savings rate (helped by salary hike and Home loan closure)
As Pattu sir said many times, I am not worrying about the return percentage and not worrying about the capital gain taxes during portfolio rebalancing. When I started my career in 2011, 1 crore seemed to be a huge sum. But now it doesn’t look like a huge sum due to “pana veekam”. (Pattu sir’s favourite word in Tamil for inflation).
I am sharing my story not to boast but to inspire young earners to start investing for their goals like Pattu sir had inspired many people like me.
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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