How a single mom is on track to financial freedom

Published: January 1, 2021 at 9:59 am

In the third edition of personal finance audits by readers, a single mom of two kids shares her inspiring journey. Her money story also brings out the importance of working with a SEBI registered fee-only advisor.

As regular readers may be aware, we publish a personal financial audit each December – this is the 2020 edition: How my retirement portfolio performed in 2020. This time, 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 goalsSecond audit:  How Avadhoot Joshi evaluates his investment portfolio. The third audit is by “EE” as she would like to be called after the Tamil name for a housefly 🙂

I am a single mother of two kids since 2013. I am working in a product MNC. Before 2014, I had invested in ULIPs, share market etc. but withdrew all post-2010. Spent all money towards home loan closure for a 2BHK flat (where we live) and some physical gold other than some medical expenses. We go on multiple family vacations each year, spend good enough to mingle with my circle of friends, do not compromise on lifestyle or passion in the name of frugality. I keep adjusting my goals, based on changing needs.

I track my goals and investments using my own excel sheet with all entries keyed in periodically; file my ITR using the Govt website; offload work to paid workers, wherever it works. I work on people impacting work in addition to my regular job. I donate a little to people in need.

Investments

Took expert advice from AIFW and covered my basics first and later started with 1Lakh investment in PPF (April 2014 – did not time it well). After all research, I did goal-based investing in HDFC Top 200, QLTE and Franklin Bluechip. After two years of such DIY investment, I realised that I was unable to understand which fund is performing well or not.


I wondered if markets can even give back the fees paid for a financial planner if I opt for one. After a long thought, I went ahead to hire one. Fortunately, a friend from Facebook group Asan Ideas for Wealth (Melvin Joseph), who I trusted well, agreed to be my Financial planner. I am delighted with this decision to date.

Pie chart showing expenses and investments from salary
Pie chart showing expenses and investments from salary

More about Melvin: 

  1. Fee-only Advisor Journey: Melvin Joseph’s determined struggle to the top
  2. SEBI RIA Melvin Joseph releases free e-book: Health Insurance Simplified
  3. Kid’s Education and You (KEY) now serves 260 children thanks to you!

Investment strategy

As soon as I get my salary, I allocate money for regular expenses and a little backup for unexpected expenses and invest the rest for my goals.  From my previous three funds investments, I have moved to investment in 5 Equity funds by removing the older ones from the list. I also have PF, PPF and my company stocks dedicated to my retirement.

Pie chart showing distribution of investments
Pie chart showing the distribution of investments

Traditional investments: I haven’t bought any gold in the past nine years and don’t have to buy any further. I inherit half of an independent house in a metro city and own a decent 2BHK flat in another city, where I live.

I am about to buy an independent house in my native metro city, which is unplanned. I wouldn’t be touching any of my future goals’ investments, and by selling a plot I invested a decade ago, I am buying this house. Also, I will continue the current investment amount towards my goals and wouldn’t reduce it due to home loan burden. I am not retiring earlier than planned to buy this house. This is merely due to family sentiments, and it wouldn’t hurt me much, due to the rental income I would get from this house.

Financial Freedom

With less than 6 yrs of investments, I am almost close to my financial freedom. I could have retired in a couple of years, if not buying a house now. On any of my MF investments, most days the XIRR is 9-14%. My current salary is 2.3 times of what it was in 2014.

I started with the lowest five digits in 2014 in investments. With six months to go for my 40th birthday, I have saved 40 times my family needs (per annum need) / 57 times my annual need (without kids expense). Frugal living without compromising on upskilling/ passion/ lifestyle, regular investments, and focus on career growth helped me be on the right track.

Bar chart showing progress to financial freedom
Bar chart showing progress to financial freedom

The Future

My WILL is available for my family’s access, and also the passwords are available to access by my family if the need arises. I want to add super top-up cover for health insurance sooner, and I may or may not add critical illness cover (which I have been avoiding since there is a lot of amount spent on insurance premium alone).

I am yet to gain more confidence towards investing in markets directly (without AMCs) and hence will continue my current investment strategy as is with annual review with my financial advisor.
Will focus more on health and family while I continue my efforts towards my career growth.

Thank you note: My sincere thanks to Melvin sir, Ashalji, Pattu sir, Swapnil and a few more AIFW members who supported me all through this journey.

Ps. Don’t be deceived by the above numbers which were planned for a very high-quality retirement. With frugal lifestyle post-retirement (not much different from my current lifestyle), I am much closer to my goals.

Resources

If you would like to work with a financial advisor to set your finances on track, you can choose one from the freefincal List of Fee-only Financial Planners in India (SEBI RIAs)

Are you interested in more financial freedom stories and guides?
  1. How I achieved financial freedom and became an Investment Advisor! (part 1)
  2. Factors that helped me achieve financial freedom (part 2)
  3. Fee-only Advisor Abhishek Kumar’s tap dancing to financial freedom
  4. Why we need to forget about pension after retirement and focus on financial freedom  Paisa Vaisa Podcast Part 1
  5. How to create your financial freedom plan – Paisa Vaisa Podcast Part 2
  6. Paisa Vaisa Podcast Part 3
  7. I achieved financial independence at 35: My journey and lessons
  8. Early Retirement at the 40s in India with financial independence: An Interview

Want a free guide to start your journey towards FIRE? Early Retirement in India -How to Retire Early Safely: Free E-book

 

Do share if you found this useful

Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video!  More than 700 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 2600 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 600 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 the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored three print books, You can be rich too with goal-based investing (CNBC TV18), Gamechanger, Chinchu Gets a Superpower! and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] com
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