In Feb 2022, a 31-year-old reader named GB shared his financial journey: From 5 lakhs in debt to building a corpus worth six years in retirement. This is an updated audit.
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.
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. Now over to GB.
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Hi All. I hope everyone is doing well. This is my 2nd post of sharing my financial Journey and update on my last year’s audit. First, a recap. Below is the last post with my net worth status.
2022: Health insurance: my wife and I have a family floater of 5 lakhs coverage outside and six lakhs in the office; my Mother has five lakhs outside and six lakhs from the office.
Term insurance: 1 crore.
Emergency fund: 5 months of monthly expenses in FD.
Retirement: Equity 76% and Debt 24% (PF and PPF)
If I Retire today: The corpus will last for 6.2 years. See: Review Your Financial Freedom Portfolio in Seven Easy Steps
Term insurance: 1 crore.
Emergency fund: 5 months of monthly expenses in FD.
Retirement: Equity 76% and Debt 24% (PF and PPF)
If I Retire today: The corpus will last for 6.2 years. See: Review Your Financial Freedom Portfolio in Seven Easy Steps
Current update:
2023 till Jan 31st: Health Insurance: my wife and I have a family floater of 10 lakhs and a super top-up of 20 Lakhs coverage outside with the same insurer and ten lakhs coverage in the office. My Mother has ten lakhs outside and six lakhs from the office.
Term insurance: 1 crore ( Plan to increase the coverage to another two crores by March).
Emergency fund: Just two months of the corpus in a savings bank.
Retirement: Equity 72% and Debt 28% (PF and PPF)
If I Retire today: The corpus will last for 9.9 years.
Emergency fund: Just two months of the corpus in a savings bank.
Retirement: Equity 72% and Debt 28% (PF and PPF)
If I Retire today: The corpus will last for 9.9 years.
I saw many ups and downs in 2022. The emergency corpus decreased to nearly zero and was that way for 3 to 4 months. I realised that emergencies could happen all 365 days. So I stopped investing for my Retirement for a few months and added to my emergency corpus. At the same time, my existing investment value was in place and not touched. Last two months, I gradually started contributing to my Retirement fund.
I changed my job mid of 2022 after 4.4 years with my desired profile with a 60% increase in my last salary. I Learned another new skill in 2022, adding a little boost to my profile.
Investment – I started index investing from Jan 2023 onward with just one nifty 50 index fund for my retirement and stopped contributing to the existing two Active funds. I continued with 1 Active fund for ELSS, which is still required for my 80c limit and the rest in PF and PPF for my Debt portion.
My contribution for retirement is at least 50% of my monthly salary from 2018 to till date. The remaining amount will be used for Home expenses, emergency funds, yearly insurance premiums, and other short-term goals in FD or the savings bank.
Before 2020 it was SIP mode for my active funds. Post that, I manually purchased each month for retirement once the salary was credited. I am planning to add a debt fund for my retirement.
I use this as a thumb rule while reviewing my portfolio: Check your progress toward financial freedom with this formula!
Next year’s plan:
- Health insurance: I need to buy Super top for my mother, me and my wife with higher coverage.
- Emergency fund: I need to build a corpus of a minimum of 2 years or equal to my base health insurance Amount.
- Reduce Equity exposure to 70 % or less
- Debt part, I need to add a debt fund for retirement and another goal.
- Need to hire a SEBI registered fee-only advisor (link points to our curated list of advisors)
Thank you for reading my story will see you all in 2024 with my next post.
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.
- First audit: How Suhas tracks his MF investments and reviews financial goals.
- Second audit: How Avadhoot Joshi evaluates his investment portfolio.
- Third audit: How a single mom is on track to financial freedom
- Fourth audit: How Gowtham started goal-based investing & took control of his money
- Fifth audit: Why my financial independence & early retirement plans were postponed by four years
- Sixth audit: How Abhisek funded his marriage & is on track to financial freedom.
- Seventh audit: How Rohit’s early struggles defined his investment journey
- Eighth audit: Why my investments are still on track despite job loss and lower-income
- Ninth audit: How a retirement planning calculation scared me to take action
- Tenth audit: I made several investment mistakes but have turned my life around.
- Eleventh audit: My net worth doubled in the last financial year, thanks to patient investing!
- Update: How I achieved investing nirvana.
- Twelveth audit: My financial journey: from novice to goal-based investor.
- Thirteenth audit: My journey: from a negative net worth to goal-based investing.
- Fourteenth audit: From Fixed Deposits to Goal-based investing in MFs.
- Fifteenth audit: My 10-year financial journey – mistakes made and lessons learnt.
- Sixteenth audit (part 1): How I achieved financial independence without mutual funds or stocks.
- Sixteenth audit (part 2): Lessons from my financial independence journey and future investment plans.
- Seventeenth audit: How I plan to achieve financial independence and move to my native place
- Eighteenth audit: I used the current bull run to reduce my mutual funds from 14 to 4!
- Nineteenth audit: How a conservative investor created his financial plan
- Twentieth audit: I plan to achieve financial independence by 46; this is my master plan
- Twenty-first audit: I have made many investment mistakes but am on course to financial independence by 45.
- Twenty-second audit: I felt worthless six years ago but have achieved financial stability today
- Twenty-third audit: My financial journey was directionless until age 40: this is how I made up for lost time
- Twenty-fourth audit: Why I increased equity MF investments by 275% and reduced PPF contributions.
- Twenty-fifth audit: How I track financial goals without worrying about returns
- Twenty-sixth audit: I am 24 and started investing 1Y ago, but what am I investing for?
- Twenty-seventh audit: How we plan to achieve a retirement corpus 50 times our annual expenses.
- Twenty-eighth audit: I thought equity investing was a gamble, but now I aim to hold 60% equity for retirement
- Twenty-ninth audit: My journey: From 5 lakhs in debt to building a corpus worth six years in retirement
- I started my journey in debt but now invest 50% of my salary for retirement.
- Thirtieth audit: My investment journey: From random purchases to a goal-based portfolio
- Thirty-first audit: My investment journey: from product-driven to process-driven
- Thirty-second audit: How a young couple is trying to balance travelling and investing
- Thirty-third audit: My journey: From Rs. 30 bank balance to financial independence
- Thirty-fourth audit: Our journey: From scratch to a net worth of 18 times annual expenses.
- Thirty-fifth audit: From a net worth of Rs. 6000 to auto-pilot goal-based investing
- Thirty-sixth audit: How I retired from corporate bondage at 46, two years ago!
- Thirty-seventh audit: How I learnt to keep it simple and build a net worth 19 times my annual expenses
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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