How mutual funds helped me reach financial independence

Published: December 16, 2021 at 7:00 am

In this edition of the reader story, we start a new series – mutual fund investment journeys. We requested members of the Facebook group Asan Ideas for Wealth with more than ten years of mutual fund investing experience to share their journey. This is the first episode from an investor who prefers anonymity. Let us call him Mr Dagwood.

Mr Dagwood explains how disciplined investing in mutual funds helped him create a corpus worth 33 times his current annual expenses (typically referred to as 33x). This means that if he were to retire today, he can live off his corpus for the next 33 years, provided his portfolio grows at a rate equal to that of inflation (zero real return). A value of 30x is usually considered the threshold of financial independence (although a higher corpus is necessary before we can quit regular employment). See: Early Retirement in India -How to Retire Early Safely: Free E-book

Please share your experience with fellow investors and help the younger generation: We invite readers to share either mutual fund investing experiences or stock investing experiences or their goal-based investing journey at freefincal. This will inspire fellow investors and reiterate a basic rule of life- we all make mistakes and learn from them to become better.

There is no specific format or word limit for such articles. Just write your investing story as it happens without sounding preachy. You don’t need to worry about grammar or language expertise. Your story can be published anonymously. If you are interested, write to us at freefincal [AT] gmail [dot ] com.

Check out the full archive of reader stories. Some recent articles are also linked below.


Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

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. Now over to Mr Dagwood.

I want to share my mutual fund journey since 2008. It was not disciplined at the start but eventually reached a good level.

I started (or found myself) investing in mutual funds in 2007-2008 thanks to my LIC agent, who had also started selling mutual funds. He managed to convince me that mutual funds gave good returns. I did not have any idea about mutual funds at the time.

I invested in around 5-8 equity mutual funds based on his suggestions. I think the total amount was close to 1.5 lakhs. And then, the market crash happened, and I got a first-hand taste of risk in mutual funds.

Thanks to my family motto of letting things settle for a while, I did not panic and sell those for a loss. I did not need that money for the time being and let those mutual funds continue. Two of the funds were close-ended for ten years, so I had to keep them for the duration.

Eventually, after 5-10 years, most of those funds recovered and even gave back good returns. Some even doubled the money invested. And I learned a lesson to get more knowledge before investing in any such instruments.

I started getting interested to learn about mutual funds (and other investments) somewhere around 2012. I don’t remember exactly why, but I know I was motivated by the journey of Mr Money Moustache and Early Retirement Extreme for financial freedom and early retirement.

I read related books/resources like BogleHead, Permanent Portfolio, and Rat Race to Freedom. I liked the concept of the Permanent Portfolio and started investing in mutual funds using a similar concept.

Every month I invested 25% each in an equity fund, debt (gilt) fund, gold fund, and cash (short term debt) fund. I went onsite, and I managed to make some good savings. I kept investing most of it in the Permanent Portfolio funds.

Editor’s note: Onsite opportunities or higher income alone cannot make a person rich or financially independent. Disciplined investing (not saving) and staying calm during troubled times is the key.

I joined AIFW somewhere in 2014-15. It was a good opportunity to learn about Indian investing and how it differed from the American way that was mostly the reference available on the Internet and in books.

Somewhere around that time, I shifted from the Permanent Portfolio to the typical BogleHead 60:40 equity/debt portfolio. I started using the turnkey solution I read in freefincal for the equity portion. For the debt, I continued using a short-term debt fund.

I continued saving and investing consistently almost every month. My savings rate would be somewhere around 50-75% of my income every month.

I believe it is this discipline that has now allowed me to reach a networth of around 33x of my expenses today.

I recently joined the Goal-based portfolio management course by freefincal and started following the step down from the 60:40 allocation every year.

I now invest in an index fund for the equity portion. I continue using a short-term debt fund for the debt portion.

I have four mutual funds in my portfolio and will continue with the same. Eventually, I plan to reduce them to just 2-3 mutual funds.

My only goal with these funds is for retirement. I don’t plan to retire. I want to build a business that will replace my job income.

I am thinking of stopping further investments in these funds as they should be sufficient for retirement. And continue new investments in “safer” instruments or funds because I don’t need to take the risk.

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.  The 2021 edition will be published in a few days. 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 this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.

  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter with the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

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 ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, 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 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 700 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!   
Our new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the 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, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? 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 parents 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 is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & it's content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. 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 with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will 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 and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
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, and 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 300 (instant download)