I start this year debt free with a 6.5X retirement corpus

Published: January 13, 2024 at 6:00 am

Avadhoot reviews his investment portfolios in his 3rd audit for freefincal. His first two audits are linked below.

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.

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 have also started a new “mutual fund success stories” series. This is the first edition: How mutual funds helped me reach financial independence.


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Hello friends! This is Avadhoot Joshi. I took my first Personal Finance Audit for 2020, followed by a second one in 2021, inspired by Pattabiraman Sir. Unfortunately, I didn’t publish my next financial audit in 2022 due to laziness.

So, here is my fourth Personal Finance Audit for 2023 with much gratitude to Pattabiraman Sir for giving me this opportunity—special thanks to Ashal Jauhari Sir (Ashal is the owner of Facebook group Asan Ideas for Wealth or AIFW), Pattabiraman Sir and the AIFW community for shaping my financial journey.

Let’s start with the usual and favourite question – ARE THE BASICS COVERED?” 

  • TERM INSURANCE – DONE. With Max Life Insurance. Why? – Premium was the lowest compared to others.
  • HEALTH INSURANCE – As I am a PSU employee, cashless In-Patient health facilities in some reputed hospitals around the posting location are provided. Other hospital expenses (inpatient and outpatient treatment) would be reimbursed after the claim (non-medical deductions and TDS). I am currently comfortable with this. I have not yet opted for separate Personal Health Insurance. Maybe I will also opt for a separate cover, depending on developments.
  • EMERGENCY FUND – The current emergency fund equals four months’ expenses.
    • 36% Parag Parikh Conservative Hybrid Fund Direct-Growth and the rest in a savings account.

FINANCIAL GOALS – Here comes the audit’s next and most important part. 

1) Retirement (Officially 24 years away) – I am 36. Wife is 31 years old homemaker. Since the beginning, my retirement portfolio has been debt-heavy for two reasons – 1. Being in PSU, hefty PF contributions from self and employer. 2. I started investing in equity very late – in 2018, i.e., after almost six years of employment.

I must invest as much as possible into the portfolio’s equity portion to catch up and need not bother about asset allocation until my Equity portion grows to at least 50% of my total retirement corpus. 

EPFO allowed me to redeem EPF during this COVID Period for two years (2020 & 2021). I used that opportunity to increase my manual SIP in equity to push equity allocation north somehow. The change in asset allocation since April 2020 is shown below.

Change in retirement portfolio asset allocation
Change in retirement portfolio asset allocation

Debt Part of Retirement Portfolio – EPF

Equity Part of Retirement Portfolio – UTI Nifty Index Fund (Direct-Growth) – manual SIP every month.  

The Asset Allocation is 26% Nifty 50, and the rest is in EPF.

The current Retirement Corpus is equivalent to 6.5 times the current yearly expenses (Expenses likely to be continued after retirement are considered), i.e. 6.5X. During the last year, a retirement corpus equivalent to 2.5 years of expenses was added, out of which a retirement corpus equivalent to 1 year was added through investments and a balance was added through returns. One thing to remember is that “X” is not constant but changes every year depending on inflation and lifestyle upgradation.

Trivia – Equity portion XIRR is 17.5% (Manual SIP since Dec 2018)

2) Kid’s Graduation 

We are blessed with two boys. The first son is 6.5 years old, and the second is two years old. So, the investment planning is modified accordingly.

I started investing in the education corpus when the first son was 1.5 years old (November 2018) with 100% Equity Allocation. The plan was to reduce equity allocation by 6.25% yearly so that when he was ready to graduate, all the corpus would be in debt instrument. After the birth of my second son, I have decided to combine the graduation of both kids as a single financial goal.

Revised asset allocation for Kids college graduation
Revised asset allocation for Kids college graduation

I don’t know how this plan will pan out in future. But since time is on our side, I am taking a leap of faith. The withdrawal will start in 2035 & will go on until the graduation of the second son.

Returns expectations considered while doing the investment plan – Equity 10% & Debt 6%.

The growth of the Kids’ Education Portfolio until now is shown below.

growth of the Kids’ Education Portfolio
growth of the Kids’ Education Portfolio

Since the investment journey is in the initial stage, asset allocation is handled by adjustments in every month’s manual SIP in the Equity/Debt part. So, until now, rebalancing is not done as such. 

Debt Part of Kids Education Portfolio – PPF (16%) & ICICI Gilt Fund Direct-Growth (4%). ICICI Gilt Fund is added for rebalancing in future, considering the illiquidity of PPF. 

Equity Part of Kids Education Portfolio – Parag Parikh Flexi Cap Fund Direct-Growth (80%)

Trivia – The XIRR of Parag Parikh Flexi Cap Fund is 25.1% & and the XIRR of ICICI Gilt Fund is 7.1%.

ASSETS-  Since all assets are linked to a goal, it is straightforward to keep track. The current asset allocation is 63% debt and the rest in equity.

LIABILITIES – We have had only one Loan, i.e., a Home Loan, since 2017. During the 2020 audit, I had planned to close it by 2027 with increased EMI. Due to some extra cash flow, we could prepay some of the amount in 2021 and plan to close it by 2025. We are glad to announce that we have closed the home loan and become debt-free this month. 

The Y-o-Y changes in Assets, Liabilities and Net-worth are shown below.

Avadhoot's net worth tracker
Avadhoot’s net worth tracker

PLAN FOR 2024:

  1. To increase the emergency fund from the current four months’ expenses to 6 months’ expenses.
  2. To improve the equity portion in the retirement portfolio to 30% from the current 26%.
  3. To add retirement corpus equivalent to at least one year of expenses through investing alone.
  4. To continue investment for Kids’ education as per plan. 

Thank you.

Reader stories published earlier:

As regular readers may know, we publish a personal financial audit each December – this is the 2022 edition: Portfolio Audit 2022: 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.

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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.
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