How Gowtham started goal-based investing & took control of his money

Published: January 7, 2021 at 11:05 am

In the fourth edition of personal finance audits by readers, Gowtham Subramanian discusses how he has started goal-based investing, focusing on asset allocation and how it has made him feel more in control over his finances.

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.

Gowtham has also shared an interesting analysis on “Passive income strategy with Automobiles” which will be published in the coming days.

Note No part of this article, particularly the goals, asset allocation and investment choices should be construed as investment advice. Kindly take stock of your needs and invest as per that. Each audit is different; some have a narrative; some a summary of actions. We request readers to focus on the benefits of structuring investments according to goals and the emotional benefits that come with it.

I started my financial journey in Jan 2019 without any knowledge of Personal Finance. I started goal-based investing and asset allocation by June 2020 with Freefincal and the DIY community’s aid. Currently, I have set 4 goals for myself and decided on the tenure to achieve the same.


Table showing Gowtham's goals with asset allocation
Table showing Gowtham’s goals with asset allocation

Goal 1 – Retirement

  • Investment instruments – PPFAS Long Term Equity Fund and PPF
  • Target asset allocation (Equity/Debt) – 60:40
  • Asset allocation is currently 30:70. This is because the PPF account was started earlier and had accumulated some corpus before I began goal-based investing.
  • I have achieved 50% of the target corpus for this year. For retirement alone, I track the target corpus year-wise since the required final corpus is baffling.
  • There was no option to re-balance from debt to equity. Hence the strategy has to be tweaked.

Goal 2 – Child Education

  • Investment instruments – UTI Nifty Index Fund
  • Target asset allocation (Equity/Debt) – 70:30
  • Asset allocation is currently 100% equity. Planning to accumulate a decent corpus in equity first and then add debt component gradually.
  • Investing began around November 2020, and therefore the achieved corpus is negligibly low.

Goal 3 – Emergency Fund

  • Investment Instruments – ICICI Bank Flexible RD.
  • Target Asset allocation (Equity/Debt) – 20:80
  • 20% of the total target corpus was achieved
  • The returns were not great, but due to the need for instant redemption of funds I have been using the Flexi-RD
  • Once 80% of the goal is achieved, planning to add equity.

Editor’s note: An investor may choose to include a small equity exposure to an emergency fund for appreciation if know what it means and as long as they do not include that equity with other goals.

Goal 4 – Vacation

  • Investment Instrument – ABSL Liquid Fund
  • No equity allocation. Planning to hold only liquid funds since the tenure is very short.

Resolutions for 2021

  • Goal 1: Improve the asset allocation in the equity side, by reducing the PPF investment and redirect the same to PPFAS LTEF.  Add a short – term debt fund to the mix for rebalancing.
  • Goal 2:  Add Nifty Next 50 Index fund to the portfolio with the 60:40 ratio (N50:NN50); A new PPF account for my spouse and invest the remainder into that account.
  • Goal 3: Switch the investments into ABSL Liquid fund, and capital gains will be retained in the emergency corpus.
  • Goal 4: Start investing from Jan 2021. Plan a vacation with good value for money.

Lessons learnt till Dec 2020

1. Don’t invest in an actively managed sectoral fund just by looking at past performance.

  • Monthly SIP in ICICI Pru Banking and Financial services fund from Jan 2019 – May 2020. I redeemed the fund in November 2020.
  • Concentration risk was very high, which I realized later in March 2020 when the stock market crashed due to COVID.
  • The fund took a longer time to recover than NIFTY 50 and many other large-cap funds. Even NIFTY Auto which was adversely affected recovered sooner than the fund.
  • Though 1.5 years time-frame is very low to assess the fund’s performance, the pre-COVID capital gains were also poor.
  • I redeemed the funds without losses after six months.
  • Reason for redeeming – Majority of the fund holdings were in HDFC. The HDFC was in the news for inadequate IT Infrastructure. Also, since I was planning to migrate to the Nifty 50 index fund, I completely redeemed the fund to avoid overlap.
Total investment made by Gowtham and current value in ICICI Pru Banking and Financial services fund
The total investment made by Gowtham and current value in ICICI Pru Banking and Financial services fund is shown.

2. Total cost of ownership of an ETF is high in comparison to MF units.

  • Monthly SEP with ICICI Nifty Low Volatility 30 ETF from April 2020 – October 2020. Sold off the units in October 2020.
  • I redeemed the ETF due to the high holding cost with ICICI Direct in AMC account maintenance charges and taxes.
  • The ETF performance was good, but I wanted to switch to a discount broker from a full-service broker.
  • Also, the performance comparison was made with the UTI Nifty Index Fund before redemption. As you could see from the past performance, both are consistent with market trends, and also the low volatility quotient of the ETF wasn’t that helpful.
  • We could see that the UTI N50 has beat the ETF in terms of performance and has also recovered fast enough.
  • Therefore, the inference was to invest in an ETF only when we have significant direct equity exposure. Small exposure to an ETF just for its sake doesn’t justify the incurred total cost of ownership.
Comparison of ICICI Nifty Low Volatility 30 ETF and UTI Nifty 50 index fund
Comparison of ICICI Nifty Low Volatility 30 ETF and UTI Nifty 50 index fund

To summarize, 2020 was a good year for my personal finance. I could learn and implement many things, and the feeling of financial secureness has definitely improved. Hoping to put my resolutions to action in 2021.

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 640 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 2525 investors and advisors are part of our exclusive Facebook Group! 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 in an exclusive Facebook Group! 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 585 salaried employees, entrepreneurs and financial advisors are part of our exclusive Facebook Group! 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 in an exclusive Facebook Group!   
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