After 5 years of equity MF investing I feel confident about my retirement planning

Published: January 16, 2022 at 7:00 am

Last year in our reader story series, we met 30-year old Rohit, whose early struggles led him, to start investing early in a goal-based manner. He has been kind enough to share an update on his finances – how he handled short term goals last year and why he feels confident about his retirement planning.

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 their investing journey. See, for example, this piece by a 29-year old: How I track financial goals without worrying about returns.


Build a complete financial plan with our Robo Advisory Tool. More than 1000 investors and financial advisors use it!
Get free money management solutions delivered to your mailbox! Subscribe to get posts via email! (Subscribers get exclusive discounts!)


New Tool! => Track your mutual funds and stocks investments with this Google Sheet!

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 Rohit.

Wishing everyone a very happy new year, may this new year bring health, wealth and prosperity to us all, and discipline and focus to fulfill our goals.

I am writing my second audit, at almost the same time as last year. As we all know, a lot has changed in the last year. We continue to have a global pandemic causing immense disruption in our lives (please maintain covid appropriate behaviour) and back to back nerve-wracking events in both debt and equity markets. This has forced most of us to reprioritise and make relevant changes to our approach to life and investments. I am no exception.

Short term goals achieved in last 1 year

I have successfully achieved my short term goals of buying  a car for family and getting married (I gathered my rosebuds, while I may 🙂 )

Car purchase

I wanted to buy a car for my parents this year. We had never owned a car before, so this was a big event for all of us. I was able to accumulate money for this in my savings account and didn’t require a car loan. 

Only thing is, this required a little higher corpus than expected as the lower end cars didn’t inspire confidence. I ended up buying a car costing nearly 8.5L on road, after supplementing some money from active income. 

The research required for this has been very educational, I knew nothing about cars before this, and every conversation about cars among people my age ended with me punching a wall to feel manly again!

Marriage

Don’t know how this happened – but someone deemed it worthy enough to get married to me! Hurray!

For marriage as well, I was able to save money in my savings account and kept on supplementing preparation expenses with active income, as expenses spanned across months.

With both short term goals reached, I am thankful that I was able to keep myself debt free in my quest to achieve them.

My next short term goals

Car purchase (yet again)

Since my wife and I are professionals who will live in a different city than our parents, I will likely buy a car sooner or later. I will start earmarking some funds towards this goal. Savings account and money market funds will be the saving instruments.

Managing increased expenses

Now that we are two, I am expecting an increase in expenses once we move back to the city. Technically, it may not appear like a goal, but I will prefer being explicit about it. This keeps me connected to reality.

Long term goals

My long term goals remain the same for now. I am yet to sit back and evaluate the changes in my current plan post marriage.

Retirement

I will continue contributing to my retirement corpus. Calculating conservatively, I am currently at ~12.5X my annual expenses.

I am satisfied with the growth in corpus this year, given that I had to fulfil my two short term goals this year, and monthly expenses have and will increase going forward. Gains from the equity market rally have contributed significantly to the portfolio growth this year. 

After 5 years of investing, I am feeling for the first time that my equity portfolio has formed a good base – gains from accumulated corpus combined with investments henceforth, has the potential to be life-changing in the next bull run (Sensex staircase climb), whenever that happens.

Equity portfolio

I would consider this year a win for myself on the behavioural aspect of personal finance. The markets presented lots of opportunities to disrupt any decent plan we had. Thankfully, I stuck around. Special thanks to Pattu sir for his timely videos and posts throughout the crash and recovery. 

Mutual funds

The plan is to keep investing every month like always – irrespective of market conditions. Not much change in equity MF portfolio since last time – money is still almost equally divided among PPFAS, Axis, Mirae and Invesco AMCs, and I am happy with portfolio performance. Here, I have started thinking about the comfort level of the corpus in a single fund – but no course of action is currently in the plan.

MF portfolio XIRR (as per VR) is 34.4%

Stocks

I am continuing to contribute to my stock portfolio every month as well – irrespective of market conditions. The % has grown from 1.5% in the last audit, to ~6% of the total equity portfolio. I have not cross-checked – but according to ValueResearch, the lifetime dividend earned from this has crossed Rs 1000. Hurray again! Stock weights have skewed a little, will correct it in the coming months.

Stock portfolio XIRR (as per VR) is 26.2%

Rohit's Stock Portfolio
Rohit’s Stock Portfolio

Debt portfolio

As mentioned last time, I mostly use debt funds and PPF as part of the debt portfolio – with a minimal Rs 1800 contribution to EPF and no NPS.

The plan is to continue doing the same. However, the debt fund portfolio exposure has extended to gilt funds. Now that I understand them as well – I am tracking DSP Floater (benchmarked to short term gilt), ICICI Gilt, SBI Gilt and Parag Parikh Conservative Hybrid. I have started taking exposure to SBI Gilt. Apart from this, I mostly use money market and low duration categories.

We all know now, better than ever – debt investing is harder than equity. So I have aligned my portfolio as per my return expectations – and areas of risk I am comfortable with.

Overall asset allocation

Asset allocation is very close to desired 60:40, have no change in plans for this.

Rohit's asset allocation
Rohit’s asset allocation

Insurance

There has not been much change in insurance.

  • I took corporate offered Corona policies last year for my family and paid the required premium.
  • I have also topped up the corporate offered group policy (now 5L + 5L) this year after paying the required premium.
  • I have included my spouse in my corporate group insurance policy.
  • I continue to have a personal 10L base + 20L super top-up policy.

Plans for 2022

  • Be grateful, disciplined and focused. It feels I have come a long way, but an even longer way to go from here.
  • Enjoy married life. Wish me luck!
  • Increase emergency corpus, and again – do it fast.
  • Revisit short term and long term goals in the context of new events in life.

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.

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.

Do share if you found this useful
Enjoy special discounts on our 10th anniversary until May 31st!  
Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr 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 nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or 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 for promoting unbiased, commission-free investment advice.
Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video!  More than 1000 investors and advisors use this!
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 2800 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 what 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.
Our new course!  Increase your income by getting people to pay for your skills! More than 675 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
My new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, if we had to groom one ability in our children that is key not only to money management and investing but for any aspect of life, what would it be? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parent’s plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
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!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Did you know? We have more than 1000+ videos on YouTube to explore! Join our YouTube Community!

Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps