Hi, this is Abhineeth. I am a 30-year-old working as an Engineer in the state government service. I joined this position in 2016, and this is my 7th year. This is how I aim to achieve financial independence and buy/construct a decent house for my family.
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. Now over to Abhineeth.
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My initial investment journey. After joining the job in the tax planning phase, I decided to invest in PPF as, at that time, I was unaware of the ELSS schemes. As I was already in the National pension scheme to cover the balance amount of 1.5Lakh under the 80c section, I used the PPF account, and due to a friendly neighbour-uncle (LIC agent), I got an endowment policy of Rs.5 Lakh instead of a term insurance policy which I regret to this day.
I later learned that investing & insurance are two different things that should not be combined. I even started a 5-year Postal Recurring deposit of 5000 per month, assuming it was eligible for a tax deduction. After finding out that it was not eligible, I stuck to it, and it matured in 2021 with an interest income of around 7.6%.
In the initial years, even after reaching the 1.5L limit in the 80c section, I continued to invest my savings in PPF. I maxed it out after learning the compounding benefit we can achieve after 8-10 years of investing in PPF.
My father had taken a home loan, and the EMI of the loan used to be around 20k. After joining the job, I used to pay the EMI, but I found it to be a great burden to pay that EMI (it was around 43% of my take-home pay at that time); hence we prepaid the loan using part of my savings & few retirement benefit amount received by my father (he is also a retired engineer from the government sector).
In the initial days, I invested my savings without any goal. As I was a default member in the NPS scheme, I found out about the NPS Tier-2 scheme and started investing in it, as I was not aware of asset allocation, I invested in the moderate risk scheme with equity of around 50% and I played around the asset allocation even kept the equity allocation to 100% at one point of time.
2nd phase of my investment journey: During the covid lockdown, I thought of utilizing the abundant time available to learn about the stock market. Subsequently, I learned about mutual funds (Debt & Equity) and the importance of emergency funds, Term insurance, Medical insurance & goal-based investment strategy recommended by Pattu sir; I was fascinated by the level of detailed analysis provided by him in the field of personal finance.
Firstly I tried to build an emergency fund of about six months of monthly expenses and later increased it to 6 months of take-home pay. I use liquid funds & FD for this purpose. I took term insurance from a private insurer for about 15 times my annual income.
I have withdrawn my savings from my NPS tier 2 account and invested in mutual funds with 75:25 (Equity debt ratio) with Nifty 50 & Nifty Next 50 index funds for the equity component & Short term debt fund for the debt component.
I regularly invest 32% of my take-home pay in these funds in addition to my mandatory NPS contributions for retirement planning. My retirement portfolio is about three times my annual expenses, with 42% in equity. I intend to achieve 50% equity within 2-3 years and maintain it up to my 50th year, then gradually decrease it to 20% by my retirement age.
To achieve my 2nd goal of house construction, I am investing in a Sensex index fund & using my already present PPF account as a debt part. I have 20% of my target amount invested in these funds, and I intend to achieve the target by 2032, by which my PPF account matures. I have 41:58 (Equity: Debt ratio) for my house portfolio, and I intend to achieve 50:50 and maintain it for up to 5 years and then gradually reduce the equity part to 0 by 2032.
I thank pattu sir for allowing me to share my investment journey. He requests young earners like me to share their investing journey, and I hope this article might help a few others who are just starting their investing journey.
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.
- First audit: How Suhas tracks his MF investments and reviews financial goals.
- Second audit: How Avadhoot Joshi evaluates his investment portfolio.
- Third audit: How a single mom is on track to financial freedom
- Fourth audit: How Gowtham started goal-based investing & took control of his money
- Fifth audit: Why my financial independence & early retirement plans were postponed by four years
- Sixth audit: How Abhisek funded his marriage & is on track to financial freedom.
- Seventh audit: How Rohit’s early struggles defined his investment journey
- Eighth audit: Why my investments are still on track despite job loss and lower-income
- Ninth audit: How a retirement planning calculation scared me to take action
- Tenth audit: I made several investment mistakes but have turned my life around.
- Eleventh audit: My net worth doubled in the last financial year, thanks to patient investing!
- Update: How I achieved investing nirvana.
- Twelveth audit: My financial journey: from novice to goal-based investor.
- Thirteenth audit: My journey: from a negative net worth to goal-based investing.
- Fourteenth audit: From Fixed Deposits to Goal-based investing in MFs.
- Fifteenth audit: My 10-year financial journey – mistakes made and lessons learnt.
- Sixteenth audit (part 1): How I achieved financial independence without mutual funds or stocks.
- Sixteenth audit (part 2): Lessons from my financial independence journey and future investment plans.
- Seventeenth audit: How I plan to achieve financial independence and move to my native place
- Eighteenth audit: I used the current bull run to reduce my mutual funds from 14 to 4!
- Nineteenth audit: How a conservative investor created his financial plan
- Twentieth audit: I plan to achieve financial independence by 46; this is my master plan
- Twenty-first audit: I have made many investment mistakes but am on course to financial independence by 45.
- Twenty-second audit: I felt worthless six years ago but have achieved financial stability today
- Twenty-third audit: My financial journey was directionless until age 40: this is how I made up for lost time
- Twenty-fourth audit: Why I increased equity MF investments by 275% and reduced PPF contributions.
- Twenty-fifth audit: How I track financial goals without worrying about returns
- Twenty-sixth audit: I am 24 and started investing 1Y ago, but what am I investing for?
- Twenty-seventh audit: How we plan to achieve a retirement corpus 50 times our annual expenses.
- Twenty-eighth audit: I thought equity investing was a gamble, but now I aim to hold 60% equity for retirement
- Twenty-ninth audit: My journey: From 5 lakhs in debt to building a corpus worth six years in retirement
- Thirtieth audit: My investment journey: From random purchases to a goal-based portfolio
- Thirty-first audit: My investment journey: from product-driven to process-driven
- Thirty-second audit: How a young couple is trying to balance travelling and investing
- Thirty-third audit: My journey: From Rs. 30 bank balance to financial independence
- Thirty-fourth audit: Our journey: From scratch to a net worth of 18 times annual expenses.
- Thirty-fifth audit: From a net worth of Rs. 6000 to auto-pilot goal-based investing
- Thirty-sixth audit: How I retired from corporate bondage at 46, two years ago!
- Thirty-seventh audit: How I learnt to keep it simple and build a net worth 19 times my annual expenses
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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