Building Wealth on a Government Salary: Lessons Learned

Published on / By M. Pattabiraman Twitter: @pattufreefincal

Published: December 15, 2024 at 6:00 am

Last Updated on December 17, 2024 at 9:18 pm

I am Alok, 31 years old, a Group A officer in the central government, and this is my journey to financial independence. I have a 3-year-old child. My wife is a housewife. I joined the service in August 2015. While joining, I had 14000 in my account and nothing else. My starting salary was around 5500,0, and no liabilities. I didn’t know what to do with the money except to keep it in my bank. I am very pleased to say that I reached the one crore mark on 5th December 2024, exactly 9 years and 3 months later.

Editors note: 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:

It is so wonderful to read these stories. All credit to their focus and discipline.
Yes, the bull market played a part, but let us not take anything away from their determined effort to enhance and secure their financial lives. If you wish to share your story of disciplined investing, you can send it to freefincal AT gmail dot com. You don’t need to be a crorepati or a lakhpati to send your journey. Process >>> Result.
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 and preserve the tone and emotions of the writers.

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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 investing. See, for example, this piece by a 29-year-old: How I track financial goals without worrying about returns. We also have a “mutual fund success stories” series. See, for example, how mutual funds helped me achieve financial independence. Now, over to the reader.

I had my share of mistakes, which encouraged me to learn. During my first year of salary, one of my relatives got me a LIC Jeevan Anand policy with an annual premium of 51000. It is an investment cum insurance plan with 10 lakh insurance and a return of 25 lakhs after 20 Years. ( a meagre return of only 4%). The other mistake was being an emotional fool, so I gave around six lakhs to some of my family members, which I lost hope of returning. By following one of my friends, I paid 76000 for consultancy services for SOP preparation for an MBA, for which I did not have the courage.

My first investment was as SIP of 2000 in Franklin India ELSS Tax Saver Fund (Regular) and 1000 in PPF after talking to my brother in law. So my initial savings rate was only 3000 rupees out of 55000 rupees. I also purchased two units of sgb in 2017. In 2019, I stumbled upon Safalniveshak.com by Vishal Khandelwal while reading ‘Beyond the MBA Hype’ by Sameer Kamat. This discovery was a turning point.” It was sort of an addiction or maybe the fear which kept me reading the articles day and night whenever I was getting the time.After reading so many articles I came to know about market cap, mutual fund investment, Stock Analysis and why I should be doing my investment by myself.

Immediately, I took term insurance and surrendered the LIC Jeevan Anand policy in the fourth year. My premium payment was 2 lakhs, and I only had 70000 as a surrender value. I increased my mutual fund investment to 6000 in two funds Franklin India ELSS Tax Saver Fund and Franklin India Low Duration Fund. I also invested directly in stocks using a cash flow method for valuation, read on Safalniveshak.com.

I also invested 3 lakhs in p2p lending, and I was fascinated with the claim of up to 24% return. I started investing in mutual funds in 2018 but had too many funds and folios (28). Many were repeating and similar, like Kotak savings funds, Aditya Birla Sun Life saving funds, IDFC low duration fund, Motilal index fund UTI index fund, and Focussed 25 funds. I was not knowing about tracking and finding my overall return.

During COVID-19, I panicked about the stock market return and missed repayment of P2P lending. I was searching for the answer, and I came across freefincal.com. I also joined Asan’s ideas for wealth on Facebook. Initially, I was horrified with my portfolio jungle, and I got into action. I started reducing my funds and took health insurance. I increased my emergency fund. I started taking out money from P2P lending.I started tracking my portfolio using Excel every quarter.


Current Condition

Term Insurance – 1 Crore (Current premium 26500 for next 5 years)

Health Insurance – 5 lakh . Current premium Rs 14500 ( covering me, my wife and child). My ministry gives free OPD services and is good for minor complications.

Emergency Fund – 6.5 %

  1. Cash  (In different bank accounts of me, wife and child)
  2.  Nippon India Liquid Fund

Gold-  6%

  1. SGB
  2. Physical Gold

Debt – 39.5 %

  1. SBI Magnum medium duration Fund
  2. PPF
  3. NPS

Equity – 48 %

  1. Navi Nifty 50 Index Fund ( In different folio for me, wife and child)
  2. Parag Pari Flexi cap fund 
  3. Axis midcap fund 
  4. SBI small cap fund 
  5. Mirae asset emerging Blue chip funds 
  6. Axis Long term Equity Fund (ELSS)
  7. Direct Stocks- 68 companies (Too Much)

I have a transferable job, so I am not planning to buy any house. My father is a government servant, and he will get a pension. He has constructed a house which he plans to stay in after retirement. My brother is settled, and currently, I have no liability. I have helped my younger brother in setting a portfolio and his CAGR is better than mine.

Future Plans

  1. I will be trimming my stocks portfolio and investing using a smallcase platform.
  2. Due to the new tax regime ELSS funds are not useful for me so I will redeem my ELSS funds.
  3. I am planning to increase my health insurance limit to 10 lakh with a super top of 90 lakhs.
  4. I am also planning to stop SIP in Navy Nifty 50 index fund and move to Small Cap index since being in a government job I have a security salary and emergency fund is enough for more than 2 years of expenses.
  5. After a discussion with my father, I am planning to invest his money in index funds and conservative hybrid funds.

Learning during this journey

  1. Don’t be an emotional fool with family in case of money matters.
  2. Investment should be started as early as possible and insurance and investment should not be mixed.
  3. We should read articles and books related to financial Independence. I was very lucky that I came to know about mutual funds and investment very early around 3 years itself in my service. Many people do not understand and do not invest timely.
  4. We should try to guide as many people in the family so that everyone’s future can be better.

Reader stories published earlier:

As regular readers may know, we publish a personal financial audit each December – this is the 2023 edition: Portfolio Audit 2023: The Annual Review of My Goal-Based Investments. 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.