Hello friends! This is Avadhoot Joshi. I took my first Personal Finance Audit for the year 2020. After that, I review my personal finances in December each year. This is my 2021 audit: Why I redeemed from EPF to invest in Equity MFs. And this is my 2023 audit: I start this year debt-free with a 6.5X retirement corpus. I did not share my 2022 and 2024 audits with freefincal readers.
Inspired by Pattabiraman Sir, here is my year-end (December 2025) Personal Finance review with a lot of gratitude to Pattabiraman Sir & Ashal Jauhari Sir and the AIFW community for shaping my financial journey.
EMERGENCY/BUFFER FUND – Current emergency fund is equal to 4 months’ expenses.
- 54% PPCHF – Parag Parikh Conservative Hybrid Fund Direct Growth
- Rest in a savings account
FINANCIAL GOALS – Here comes the next and most important part of the review.
1) Retirement (Officially 22 years away) – Currently, I am 38 years old. My wife is a 33-year-old homemaker. Since the beginning, my retirement portfolio has been debt-heavy for two reasons: 1. Being in PSU, hefty PF contributions from self and employer. 2. Started investing in equity very late – in 2018, i.e. after almost six years of employment.
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I have to invest as much as possible into the equity portion of the portfolio to catch up, and I do not need to bother about asset allocation until my Equity portion grows to at least 50% of the total retirement corpus, which is quite a daunting task.
The current asset allocation for the retirement portfolio is as follows.
- EPF: 72%
- UTI Nifty Index Fund (Direct Growth) – manual SIP every month 28%
EPFO offered the opportunity to redeem EPF during this COVID Period for 2 years (2020 & 2021), and I used that opportunity to increase my manual SIP in equity to push the equity allocation north. The change in asset allocation since April 2020 is shown below.
The current Retirement Corpus is equivalent to 8.5 times the current yearly expenses (expenses likely to continue after retirement are included), i.e., 8.5X.
Over the last year, a retirement corpus equivalent to 1 year of expenses was built through investments and returns. One thing to remember is that “X” is not constant but changes every year depending on inflation and lifestyle upgradation.
Trivia – Equity portion XIRR is 14.3% (Manual SIP since Dec’2018)
2) Kid’s Graduation –
We are blessed with two boys. The first son is 8.5 years old, and the second one is 4 years old. So the investment planning is modified accordingly.
I had started investing for an education corpus when the first son was 1.5 years old (November 2018) with a 100% Equity Allocation. And the plan was to reduce the equity allocation by 6.25% each year, so that by the time he was ready to graduate, the entire corpus would be in debt instruments.
After the birth of my second son, I have decided to combine the graduation of both kids as a single financial goal. The revised Asset Allocation plan is shown below.
I really don’t know how this plan will pan out in future. But since time is on our side, I am taking a leap of faith. The withdrawal will start in 2035 & will go on until the second son graduates.
Returns expectations considered for the investment plan: Equity 10% & Debt 6%. The growth of the Kids’ Education Portfolio until now is as follows.
Since the investment journey is in the initial stage, asset allocation is being handled through adjustments to the monthly manual SIP in the Equity/Debt section. So until now, rebalancing has not been done as such.
Debt Part of Kids Education Portfolio – Public Provident Fund (PPF) & Parag Parikh Dynamic Asset Allocation Fund (PPDAAF) – Direct Growth. Parag Parikh Dynamic Asset Allocation Fund (PPDAAF) is added for future rebalancing, given the illiquidity of PPF.
Equity Part of Kids Education Portfolio – Parag Parikh Flexi Cap Fund – Direct Growth. (79%), PPF (17%) Parag Parikh Dynamic Asset Allocation Fund (4%)
Trivia – XIRR of Parag Parikh Flexi Cap Fund is 21.7%.
ASSETS- Since all assets are linked to a goal, it is straightforward to keep track.
- Debt 61%
- Equity 39%
LIABILITIES – We had only one Loan, i.e. Home Loan, running since 2017. During the 2020 audit, I had planned to close it by 2027 with increased EMI. Due to some extra cash flow, we could prepay some amount in between, close the home loan, and become debt-free in December 2023.
The Y-o-Y changes in Assets, Liabilities, and Net Worth are as follows.
PLAN FOR 2026:To increase the emergency fund from the current four months’ expenses to 6 months’ expenses.
- To improve the equity portion in the retirement portfolio to 30% from the current 28%.
- To add a retirement corpus equivalent to at least one year of expenses through investing alone.
- To continue investment in Kids’ education as per the plan.
Thank you.
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