I evaluate the performance of my retirement portfolio and my son’s future portfolio each year in a personal finance audit. This is the 12th edition. Published from 2013 onwards, these audits provide a sense of accountability and ensure I do not fall prey to fear of missing out, preventing bad investment decisions. They also point out the fruits of systematic goal-based investing.
I am proud and delighted that several readers have also published their audits at freefincal, inspiring the next generation of DIY investors. We now have close to 50 such articles from readers. See, for example, going from a net worth of Rs. 6000 to auto-pilot goal-based investing. The full archive is here: reader story archives. Some select articles are available at the end of this audit.
Archive: This is the archive of personal finance audits published before: 2013 audit, 2014 audit, 2015 audit, 2016 audit, 2017 audit, 2018 audit, 2019 audit, 2020 audit, 2021 audit, 2022 audit and 2023 audit.
To perform a similar audit, refer to this guide: How to perform a portfolio audit? – and use the freefincal robo advisor tool. Then, you can Review and track your goal-based investment portfolio with this auditing tool.
Disclaimer: This is a personalised financial audit. No part of this audit should be considered investment advice. My current portfolio is the residue of past mistakes, and my asset allocation reflects my changing goal-based risk appetite.
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Overview: 2024 (like 2023) was a quiet year on the portfolio front. The focus has been on systematic investing and systematic increases in investments. See: Why increasing investments each year is crucial for financial freedom.
These yearly audits took quite a bit of time to publish, but since I shifted from Excel to the freefincal Google Sheets stock and mutual fund portfolio tracker, the entire process has been automated. One can compare the portfolio anytime with identical investments in benchmark or passive funds (see graphs below).
Retirement
- Asset Allocation: Equity: 66.24%; Rest is in fixed income.
- Equity comprises 85.82% of mutual Funds, and the rest is direct equity.
- Analysis of the stock portfolio is available each month.
- Fixed income with weights (wrt to total fixed income)
- NPS 56.9%, Xirr: 9.33%
- PPF Wife + PPF Pattu 10.7%
- Cash 4.11% (ICICI Arbitrage + Quantum Liquid)
- ICICI Gilt 14.6% Xirr: 6.88%
- Parag Parikh CHF 3.99% Xirr: 13.68% (This is a recent addition. So don’t get excited)
- Parag Parikh DAF 10.13 XIRR: 8.64% (This is also quite young)
- Note: The NPS has 15% equity + long-term gilts (majority). The reader, particularly those with the default govt NPS allocation, is cautioned that long-term gilts are highly volatile. My NPS corpus returns dropped almost half after the July 2013 bond crash. See 13 years of investing in the NPS.
Equity mutual funds
- Overall XIRR since June 2008: 18.13% as of Dec 13th 2024 (This was 16.99% in Dec 2023. 14.64% in Dec 2022, 19.57% in Dec 2021).
- This should not be taken seriously: On March 23rd 2020, after the biggest intraday fall, my retirement equity MF portfolio return was 2.75%. If, after 12 years, the returns could crash to that level, we must learn to evaluate our portfolio by different metrics. This is why goal-based investing is crucial. You cannot buy groceries or a college education with impressive XIRR data!
- Parag Parikh FlexiCap Xirr 22.55%, Weight 56.69%
HDFC Hybrid Balanced Xirr 15.67%, Weight 17.31%
QLTE Xirr 15.11%, Weight 12.23%
UTI Low Volatility Xirr 20.64%, Weight 13.77% - Financial independence status: If I retire now, I could live off my corpus for the rest of my insipid life and draw an income that increases with inflation at a rate equal to the portfolio return rate (zero real return).
- My current initial withdrawal rate is less than 2%. For an explanation, see: I plan to retire in 25 years; what should be my safe withdrawal rate?
- Those interested in planning for early retirement can consult this free e-book: Early Retirement in India -How to Retire Early Safely.
This is the normalized evolution of my MF retirement portfolio since its inception (Jun 2008), along with an equivalent investment in Nifty 50 TRI. This was plotted with the freefincal portfolio tracker.
Please do not read too much into the outperformance compared to Nifty 50 TRI. Sometimes it has, and sometimes it has not. It depends on when you look.
The arrow denotes the artefact due to the lump sum investment mentioned above. It is not due to market movement.
Child’s Education
I have been investing to fund my son’s future since December 2009 (a month before his birth). Then it was an 18-year-old goal, and now it has become a 3-year-old goal.
Asset allocation
- Equity: Asset allocation is 57.6%; the rest is in fixed income. Overall portfolio return: 16.93% as of Dec 13th 2024 (16.46% in Dec 2023)
- HDFCBalAdv Xirr: 20.11%, Weight: 28.70%
ICICI Multi-asset Xirr: 18.51%, Weight: 52.06%
Mirae Largecap Xirr: 15.91%, Weight: 18.95%
HDFC Sensex Xirr: 19.01%, Weight: 0.30%. A recent addition with a small exposure (0.12%). See: My 13-year-old begins his investing journey with an index fund. - Fixed income
- ICICI Arbitrage Xirr 6.23%, Weight: 25.15%
- ICICI Gilt Pattu Xirr 6.77%, Weight: 19.35%
- Parag Parikh CHF Xirr 14.43%, Weight: 17.29%
- PPF Weight: 38.2%
I decided not to lower the equity allocation because the fixed income allocation is large enough to fund my son’s college fees.
This is the normalized portfolio evolution since its inception (Jan 2010), along with an equivalent investment in Nifty 50 TRI. This was plotted with the freefincal portfolio tracker.
Again, the outperformance should not be taken too seriously. “Chinchu” is one of the many nicknames for our son, and the inspiration behind it is: Teach your kids financial decision-making with our book, Chinchu Gets a Superpower!”
Outlook & Summary
If you are wondering why I still invest in active mutual funds while recommending index funds, see Why you are recommending index funds when your portfolio has beat the market.
The key advantages I have had are time (starting early) and starting on a clean slate. Time allows you the luxury of handling market downturns, and it also changes your risk outlook.
Ten years ago, I would have said ~ 65% equity at age 48 is a bit much. However, I am comfortable with it today and wonder what I should do to leave it at 50-60% even after retirement. Remember, it is all about what the remaining 50-40% in fixed income is worth and building a diversified retirement portfolio. See: How to build the ideal retirement portfolio. So, time changes the way we view market risk. Not starting early can be a severe handicap regarding how much risk we can take and how we handle it later.
If there is one takeaway from my journey, it is to invest like a machine regularly as much as you can without worrying about market movements. If you have the time and mental strength to wait* for two bull runs, your life can change, provided you keep investing regularly as much as possible. * Wait here means wait with the right asset allocation and regular goal-based risk management.
The rate at which I have increased my investments is higher than its XIRR. See: Why increasing investments each year is crucial for financial freedom. A lavish lifestyle or servicing too much debt can hamper our ability to pay for future goals or maintain our lifestyle in future. Finding a balance is crucial. I am still trying to find mine.
I urge readers to take advantage of the holiday season and vacation (if applicable) to evaluate how much they need to invest for their goals, tag their existing investments to different goals and plan their 2025 investment schedules. The freefincal robo advisor tool can help you create a full financial plan. Then, you can Review and track your goal-based investment portfolio with this auditing tool.
Reader audits published
This year, so many have become first-time crorepatis or well-established crorepatis and have come forward to share their journey on freefincal in the reader story section. This is another such account.
Also see:
- Crossing the Million Mark: Our Journey to the First Crore
- How I doubled my retirement corpus and became a Crorepati
- Analyzing the growth of my 15 Crores portfolio
- My 15 Crore Portfolio: Answering reader questions.
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About The Author
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.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
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Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
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