Last Updated on December 29, 2021 at 6:10 pm
This is my monthly retirement stock portfolio analysis compared with an equivalent investment in a Nifty index fund and the Nifty 100 Low Volatility 30 TR index. Before we begin, investors need to appreciate the context of these investments.
I started direct equity investing only after achieving a comfortable level of financial independence and ensuring my son’s future portfolio is in a good place. At the time of writing, its value is about 25% of my equity MF retirement portfolio and about 12% of my total retirement portfolio. So it is no longer an experimental portfolio. Its worth has now become considerable.
It was experimental in a sense I invest without the fear of performance. There is no experimentation or research in the stock selection strategy. That is often a waste of time and, therefore, a waste of true wealth = time. As of date, I continue to invest in the same way. I strongly believe there is plenty of money to be made in low volatile, robust bluechip stocks.
My goal is to buy stocks with practically zero research. I also continue to invest normally in mutual funds—detail’s: How my retirement portfolio has performed in 2020: personal finance audit.
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I have purchased mutual funds all these years each month regardless of market levels, and I shall strive to copy this uninteresting strategy for direct equity as well if I have the money that is.
Time is not just money; Time is unquantifiable money. Time wasted in stock analysis or mutual fund analysis; the right time to invest etc., is an unquantifiable loss. So my goal is to buy a fund or stock within a minute.
There is zero skill involved in any aspect of my portfolio. I compensate for the lack of knowledge with discipline. Randomness (aka luck) plays a massive role in the return numbers you see below.
I got the confidence to invest in stocks after evaluating the performance of low volatility indices. I told myself I was not going to do any stock analysis or research. A quick check of company health, a brief review of volatility, and buy. If I cannot buy a stock within a few minutes, I am wasting time and money (in that order).
The way I see it, the stock portfolio is part of my retirement portfolio basket as a dividend source. It could serve as an emergency fund as a last resort. Maybe I will find another use for It in future.
In FY 2020-21, the total dividend income from this portfolio was about 30% of my current monthly expenses. In the current FY, it is already about 45%. The next goal is to receive one month’s expenses as a total quarterly dividend. I do not consciously reinvest dividends. Younger people should. For me, it matters little, as long as the overall investment made each month keeps growing at a healthy pace: How ten years of tracking investments changed my life.
This stock portfolio is part of my overall retirement portfolio. I am striving to build the ideal retirement portfolio. Also, see: How to build a second income source that will last a lifetime.
Caution: No part of this article should be treated as investment advice. I started investing in stock after my goal-based investing was in place.
Stock picking strategy
- Choose stocks with little or no evaluation or analysis.
- Choose low volatile stocks with sound financial health (low debt min requirement)
- Choose stocks that tend to trade close to their all-time highs (approx momentum indicator). See, for example, A list of stocks that have traded close to their “all-time high:
- Do not be afraid to pick expensive stocks – both in absolute price and valuation. Note: Value investing may sound intelligent and enticing, but it is essentially riskier. I neither have the age to take on such a risk nor the qualitative insights to pick stocks that the market has shunned but will be discovered sooner than later. To appreciate the risk associated with value investing and why it is more qualitative than quantitative, see this analysis: Is it time to exit ICICI Value Discovery & Quantum Long Term Equity?
- When in doubt, ask your wife when she is just about to fall asleep in the afternoon.
- Do not fear dividends (or dividend taxation).
- What matters primarily is company health. Whether it is a dividend payer or not is incidental. That is, it makes no sense to say no to a company only because it pays huge dividends! Just as it makes no sense to sell a stock because it has increased dividend payout.
- All stock investors over a period of 10 plus years will receive dividends whether they like it not. There is no choice, unlike mutual funds.
- Dividends are not something “extra” in terms of returns/performance but do represent real profit. It can serve as a source of income for an older investor: Building the ideal retirement portfolio. Younger investors will never understand this, and that is fine.
- Peaceful sleep is the best form of realised gains: hence the importance to business health, low volatility, reasonable momentum (not all stocks in my portfolio will check all these boxes).
- This is the archive of previous portfolio updates.
Related videos: How to buy your first stock without breaking your head
Retirement Stock Portfolio Sep 2021
Please note: Although investments started in 2014, about 90% of the total invested amount is from July 2020 to Sep 2021. So the portfolio is still too young, and returns numbers, particularly the XIRR and CAGR, should not be taken too seriously.
The portfolio did not fall (or did not fall much) in 2020 because the value was much lower than the subsequent investments made.
Portfolio Weights
| Stock Code | |
| ASIANPAINT | 18.93% |
| TCS | 14.55% |
| INFY | 13.86% |
| PIDILITIND | 12.95% |
| HINDUNILVR | 11.84% |
| HDFCBANK | 9.08% |
| DABUR | 6.20% |
| WIPRO | 3.65% |
| COLPAL | 3.57% |
| MARICO | 2.92% |
| ITC | 2.44% |
All return calculations are based on the Freefincal Stock XIRR Calculator.
- Dividend Return = Total Dividends divided by Total Investment
- Capital Gain (CG) Returns = Total CG divided by Total Investment
- Total Return = Dividend Return + CG Return.
- CAGR = ( 1 + Total Return ) ^ ( 1 / Avg. Years) – 1
- Avg. year = 1.06 for the entire portfolio. This is the average of all purchase investment tenures weighted by the investments (see above link, for example).
- All returns are before tax.
- The portfolio is compared with identical investments into UTI Nifty 50 Index Fund (direct plan!)
Absolute Gain
This time I have included XIRR using the tool linked above.
| Stock Code | Abs Gain | Div Gain | Total Gain | XIRR |
| WIPRO | 42.68% | 0.09% | 42.77% | 85.80% |
| INFY | 46.38% | 1.73% | 48.11% | 62.33% |
| ASIANPAINT | 48.12% | 0.75% | 48.87% | 51.38% |
| TCS | 38.90% | 1.22% | 40.12% | 49.51% |
| PIDILITIND | 44.39% | 0.59% | 44.98% | 48.96% |
| MARICO | 28.57% | 0.94% | 29.51% | 44.13% |
| HDFCBANK | 54.92% | 1.08% | 56.01% | 31.26% |
| DABUR | 25.44% | 0.94% | 26.38% | 24.93% |
| HINDUNILVR | 38.76% | 2.61% | 41.37% | 23.40% |
| ITC | 18.99% | 6.82% | 25.81% | 18.73% |
| COLPAL | 23.05% | 3.33% | 26.38% | 16.20% |
Portfolio Returns
The NIfty 100 low vol 30 is a better benchmark for this portfolio. However, we can only compare it with the index and not the ETF (from ICIC), which was launched only in 2017.
| Description | Sep-21 |
| Stock portfolio (absolute return)* | 41.13% |
| UTI Nifty index fund (absolute return)* | 28.86% |
| Nifty Low Vol 30 TRI (absolute return)* | 30.81% |
| Stock portfolio CAGR | 38.22% |
| UTI Nifty Index fund CAGR | 29.88% |
| Nifty Low Vol 30 TRI CAGR | 31.90% |
| Stock Portfolio XIRR (incl all corporate actions like dividends and splits) | 35.30% |
| UTI Nifty Index fund XIRR | 31.61% |
| Nifty Low Vol 30 TRI XIRR | 33.11% |
* Total return and CGAR includes liquidated holdings (see monthly update archives for details)
Since the portfolio is still too young (avg age = 1.06 years), I do not wish to read too much into the outperformance or underperformance wrt NIfty or Nifty 100 Low vol 30 TRI (before expenses).
According to Tikertape, the beta of the portfolio is 0.56 – that is 44% less volatile than an index like the Nifty or Sensex with zero red flags. They also forecast the portfolio to fall by about 2% over the next year – let us see how that one pans out!
According to simplywall.st, this is the portfolio “snowflake” score. “An established income Portfolio with a solid track record”. It is also quite overvalued (low valuation score).
| Analysis Area | Score (0-6) |
|---|---|
| Valuation | 0.04 |
| Future Growth | 2.44 |
| Past Performance | 4.91 |
| Financial Health | 5.59 |
| Dividends | 4.41 |
I have had fun building this with no effort and am going to continue. Please do your own research and invest.
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