I am 24 and started investing 1Y ago but what am I investing for?

Published: January 8, 2022 at 7:00 am

This time on reader stories we meet a 24-year-old budding lawyer who prefers the pseudonym Mr Rakmo Hurtak. He believes his investment strategy is ‘okay’ (for his age and circumstances) but has a curious problem.

He is not satisfied with “wealth creation” and needs a goal for his investments! This is of course fantastic as a goal-based approach is the simplest and most natural way to invest in auto-pilot.

The answer is also simple enough. Whether they like it or not, whether they want it or not financial independence after retirement is a mandatory goal for anyone gainfully employed.

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.


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

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 our youngest reader story contributor, Mr Hurtak.

At the very outset, I would like to thank Mr Pattu for this unique opportunity of sharing my journey into the world of finance.

A DISCLAIMER: This is going to be a very lengthy and bulky piece. I do apologize for the length of this Article/Audit. But the bulk is to be expected and forgiven considering my profession. We lawyers unconditionally love the written word and are ever ready to swear on it.  

MY BACKGROUND: Before we begin, I would like to share some background information that will help the readers better understand my current life situation. 

I prefer to forage on the wild west of the internet under the pseudonym of Mr Hurtak. I have recently turned 24 years of age and am a fresh Law Graduate who has just begun to get the bitter-sweet taste of adult life (still unsure what it entails). I have not started earning a salary in the traditional sense of the term.

I am being paid a stipend which is actually equivalent to the Travelling/Daily expenditure incurred in the day-to-day routine. In other words, my earning capacity at this present moment is extremely limited. (For those who are unfamiliar with the legal fraternity; the legal profession, especially the litigation aspect therein, is considered as a noble profession instead of a job and thus my situation with regards to the payment is the industry normal).

Now, I am fortunate enough to have been blessed with extremely supportive parents (financially and otherwise) and they have continued to provide for and look after me and my well-being (again, financially and otherwise) to date. This allows me to use the entirety of my stipend amount (a grand sum total of Rs. 5000/- per month on an average) as I deem fit.

Again, I was fortunate enough to come across some great free resources (Books, YouTube, Blog-posts, etc.) relating to personal finance and investing. And considering my age and lucky situation (no one is dependent on me rather I am the one who is dependent on my parents), I decided to take a carefree but well-informed plunge into the pool of investing. Or at least so I believed! 

I am 100% invested only in equities. I know Mr Pattu won’t be singing high praises about this asset allocation strategy; but then again, this is my personal audit and I do have a plan (I only have to properly figure it out).

LET’S START FROM THE VERY BEGINNING:- I started on my investment journey as a New Year resolution and opened a Demat Account with Upstox in the month of January 2021. 

I started with a grand total of Rs. 1000/- (kept on adding money from time to time) and purchased some shares of Coal India, Karnataka Bank, ONGC, OIL, etc. I had read about the miracle of Dividends and the Snowball Effect that they have over the years and was solely focused on this single aspect. 

However, as the days progressed, I soon realised that extreme patience is not one of my virtues and I made a conscious choice of shifting from the acclaimed Dividend Strategy.

THE PROGRESS AND LEARNINGS:-

After making the shift from Dividend Strategy, I became very much enthralled with the concept of Index Investing (for those interested in learning more, I would recommend the Little Book of Common Sense Investing by Mr John Bogle) and aimed my focus on the NIFTY BEES ETF. There was no plan or strategy involved. I was just dumping whatever free cash I had available with me into the said ETF. 

However, as time progressed I started noticing the fear that was being built and spread across all the platforms. Every single so-called expert was harping that the markets were about to collapse and that the post-Covid rally has seen its golden days and that it was the best time to book profits and prevent future losses. 

I am not ashamed to admit that I got influenced by all of the above. It was an experience that taught me a lot. Do your own study and build a solid plan leaving enough room for contingencies and stick with it till the very end. At the same time; make sure your plan is still relevant and depending upon the facts and circumstances, update the same as and when required.

However, that marked the end of my career as an exclusive Index Investor and I moved on to the third stage of my investing journey.

THE CURRENT PLAN:-

Having learnt the above lesson, I decided to prepare a proper plan. I realised that active investing (now inclusive of trading) is an extremely time-consuming process. I work on an average of about 12/14 hours a day and I simply did not have any time to spare or to even look at my portfolio during the market working hours.

Hence I decided to delegate the work and to personally focus on sharpening my legal acumen and earning more money rather than hoping and trying for more returns on a limited sum. 

From the month of July 2021, I decided to take the help of the mutual fund industry. 

My plan was simple. I had already invested about Rs. 35,000/- in direct stocks.  I decided to bump up this figure to Rs. 60,000/- which was to be used for active stock picking and trading (60k was the sum total of my earned income up to the month of June 2021). On average, I was earning about Rs. 5000/- per month.

Having allotted all of my previous earnings towards direct shares; all my future income was to go the Mutual Fund route till time immemorial. Therefore, regardless of the market conditions, I decided to invest Rs. 1000/- on every Friday that the market was open in Parag Parikh Flexi Cap Fund and till date stuck with the plan. That accounted for Rs. 4,000/- a month. The remaining Rs. 1,000/- was to be used in case the market dipped by a lot. To date, I have purchased about 450 units at an average price of Rs. 50 each.

This was also around the same time that my stipend saw an increase to Rs. 6,500/- per month. Therefore, I started to invest in yet another fund viz. the Navi Nifty 50 Index Fund (chosen for low expense ratio and the minimum lump sum investment amount of Rs. 500/-). In this fund also, I adopted the same strategy of buying units worth Rs. 500/- on every working Friday and the balance, if any, in case the market took a turn for the worse. To date, I have purchased about 410 units at an average price of Rs. 11 each.

MY CRYPTO JOURNEY:-

This was put to bed in a short and sweet manner. Invested Rs. 4,400/- in Crypto-Currency. A small and varied stake in select few Cryptos such as Bitcoin, Mana, DogeCoin, Shiba Inu, XRP and Ripple. Took out about Rs. 5,500/- from the entire episode (around Rs. 1,000/- in pure profit after deducting the fees/charges). 

I won’t recommend going this route. Nothing against Crypto as an asset class. It is just that I am not comfortable with the extreme volatility. There came a time when I could literally experience the uncontrolled rush that this constant volatility was providing and I came to realise that if continued on this path, I would lose my control and instead of investing/trading, I would even start gambling. I am out!

CONCLUSION:-

Over the last year of my investment journey, I have realised that I lack patience. However, what I lack in patience, I more than make up for with discipline and determination. 

I would request Mr Pattu to help me with one crucial aspect that I have purposely avoided in this Audit/Article. I have finally arrived at a plan (whether the same is ideal or not will depend on the future). However, I have failed to arrive at the purpose for the same. I cannot contend myself saying that I am undertaking this Investment Journey only for Wealth Creation. I do not have any specific goals in mind. If Mr Pattu can direct and counsel me regarding the same and how to continue on the path of investing in the absence of a goal-based strategy; I would be eternally grateful.

Signing off; Mr Hurtak.

Editor’s Note:  We have recommended that Mr Hurtak tag his investments to  “financial independence”. Several adjustments are necessary for his portfolio (lesser equity for instance!) but those can come in due course as he has started early.

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.

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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.
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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!
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