Last Updated on May 12, 2022 at 4:35 pm
In this edition of the reader audit, Arka and Rupali share how they are trying to balance their personal aspirations like travelling and exploring new opportunities with their quest for financial independence.
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.
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Please note: We welcome such articles from young earners who have just started their investing journey. 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 Arka and Rupali.
About us: As they say, “You can’t improve what you don’t measure”, thanks to the numerous audits of reader’s posts in freefincal, here I am writing my first yearly investment audits.
Before we begin, I would like to share a small context about us (me and my wife). I am currently 34, working in an IT Consulting company in Bangalore and my wife is working as International Tax Consultant in a consulting firm.
We got married in 2020, and the pandemic is the time when we started planning our financial goals seriously. Prior to that my earnings were primarily distributed for marriage corpus, an education loan and family commitments. With majority savings in PF and a small part in PPF and ELSS.
Though we have started late the goal now is to maximize investment and for that keep ourselves mobile, skilled, and flexible, to grab any opportunities coming our way (irrespective of city and country).
Basics: First things first, let’s review our basics as of March 2022
Emergency Cash: 4 months of current mandatory expenses (in case both of us stopped earning) and 8 months of mandatory expenses (in case the higher-earning person stopped earning).
Health Insurance:
- 10L base + 25L Super Top Up (Self and Wife)
- 10L base + 15L Super Top up (Parents)
Both of these are taken outside office health insurance and parents are not added in the office health insurance.
Term Plan
- 10 years of current annual income (self)
- 8 years of current annual income (wife)
Income distribution: The monthly distribution in different buckets of investments and expenses as a percentage of monthly earnings is shown below.
Key observations
- Certain buckets’ percentage has decreased because of an increase in earnings compared to last year while the expenses for that bucket remained the same
- The extra earnings are primarily channelized for investments
- We bought our first car in June 2021 with a loan of 50% on-road price
- Insurance premium includes term and medical insurance (both us and parents)
Travel is one of our primary expense buckets, as both of us like to travel, hence keeping a significant amount to fulfil our travel dreams. To compensate for that, we minimize discretionary spending like shopping and eating outs throughout the year and consider this travel corpus as our extended emergency bucket. We document our travel on our website and YouTube channel. Would love it if you have a look.
Editor’s note: Arka and Rupali had sent me a write up on “Budgeting and Managing finances for Travel Goals without hampering long term goals” in Nov 2020. I forget to publish it! My bad. I shall do so in the coming days. In the meantime, check out, how they managed to travel to Iceland within 1.25 lac per person (all-inclusive). For those interested, they run a “plan our trip” recommendation service. Note: There is no conflict of interest for freefincal here. Arka’s draft did not include these links.
Goal: Coming to the goals we have the following ones as on date.
- Retirement Goal (Considering another 20/22 years away). Don’t mind working till our mid-50s. However, will try to achieve financial independence (FI) before that. As of now, the target is to reach 35 years of expense as a corpus for considering FI
- Buying a house – currently don’t have a timeline in mind. Most probably not before 10 years. Also depends on the location of work and other variables at that time. The idea is to use the education loan fund (once it is over) and some more amount to put in the retirement bucket only and consider house purchase as a unified goal along with retirement. However, asset allocation needs to be worked on here
- Currently don’t have any kids and will plan as and when the situation changes
Investments: Before we started planning in April 2020, the majority amount was in PF and some small component was in PPF and ELSS. The idea was to first build an emergency fund and then save some for the down payment of the car which was planned for April 2021 along with maximizing equity investments for retirement as a goal
- For the emergency fund, 60% is in a savings account and 40% is in ICICI – Arbitrage fund direct plan
- For retirement, asset allocation is as below.
Since we started in April 2020, couldn’t get much benefit from the fall in the Equity market as there was no opportunity fund in place. However, the aggressive investment in equity has increased the equity percentage from 31% in March 2021 to 44% in March 2022. The goal is to reach at least 60% equity by mid-2022.
As of now below is the portfolio composition of mutual funds (which constitutes 34% of the retirement corpus) and direct equity (which constitutes 10% of the retirement corpus) as of March 2022.
| Name | Percentage Allocation | |
| Equity – MF | Axis ELSS | 9% |
| Mirae Asset ELSS | 9% | |
| ABSL Tax Relief | 8% | |
| Motilal S&P 500 | 13% | |
| Parag Parikh LTE | 20% | |
| UTI NN50 | 20% | |
| ICICI Pru N50 | 21% | |
| Equity – Scrip | RIL | 13% |
| HUL | 11% | |
| ITC | 11% | |
| Infy | 10% | |
| Bajaj Finance | 15% | |
| HDFC bank | 12% | |
| Asian Paints | 11% | |
| Deepak Nitrite | 18% |
The plan is to consolidate the ELSS investments into the last four MF once the lock-in is over. Direct Equity investment is not yet big enough to move the needle.
Performance:
- The first and the most important parameter of the performance is the retirement corpus. As of March 2021, it was a little less than 1 year’s current expense (accumulated value of all previous year’s investments), as of March 2022, this value is close to 2 years.
- Below is the XIRR for equity MFs. Since ELSSs were invested before the pandemic and stopped after August 2020, the XIRRs are high but the weightage of the ELSS in the overall portfolio is significantly less as mentioned above. The stock portfolio is at an absolute return of 30% roughly.
| XIRR | ||
| Equity – MF | Axis ELSS | 54.30% |
| Mirae Asset ELSS | 44.33% | |
| ABSL Tax Relief | 30.12% | |
| Motilal S&P 500 | -2.21% | |
| Parag Parikh LTE | 18.84% | |
| UTI NN50 | 10.31% | |
| ICICI Pru N50 | 13.42% |
Plan for 2022-23:
- There is only one financial goal that is – investment maximum possible through Equity in the retirement fund. We will revisit the asset allocation after 6 months and evaluate the need for rebalancing
- From personal goals perspective, have set up quite a few at the start of this year and tracking their progress at the end of each month. Below is the illustration (the actual numbers are masked)
- X number of days of gym/10000 steps per day in the whole year
- X number of blogs and videos on our travel website and YouTube channel
- Learn a foreign language and a local language
- Not more than X number of days of eating out
- X amount from side hustle
- Build a base for passive income
In the end, I want to thank Pattu sir for the opportunity and the amazing FB group of Asan Ideas For Wealth – my one-stop solution for finance, and career-related things. Even for a passive member like me, just reading posts, comments, and analyses – has been immensely fulfilling.
For example, during the purchase of my car, I didn’t have much understanding initially. Mining old posts and reading the discussions/opinions helped me quite a lot in zeroing down on my purchase. Wish this group grows bigger and wiser!!
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!
- 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 aim to hold 60% equity for retirement
- Twenty-ninth audit: My journey: From 5 lakhs in debt to building a corpus worth 6 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
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.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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