In this edition of the reader story, we meet a retiree who has been investing in mutual funds for the last 23 years. This is an addition to our “mutual fund success stories” series. See, for example, How mutual funds helped me reach financial independence.
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. Now, over to the reader.
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Mutual Funds are considered a relatively safe investment among the options for creating wealth. Mutual funds provide an individual investor with a channel to invest in professionally managed asset management companies. Mutual Fund investments are considered less risky than investments in individual stocks, as the investments in Mutual Funds are spread over many stocks, and a good management team can deliver reasonable returns.
Investment in Mutual Funds is good for all age categories and age profiles. The ideal thing is to start early with some Lump Sum investments and regular SIP from your savings. The investments can be planned against targeted goals such as Children’s Education, Children’s Marriages, and, more importantly, your retirement planning.
The SIP investment is the best, taking care of the ups and downs of the market over a long period. Investors should consider increasing the SIP amount depending on their resources and planning.
My experience with Mutual Funds started in the year 2001. I joined the Central Government Class 1 service in 1980. The initial years of service investments were primarily in PF and NSC for tax-saving purposes. The PF returns @8.33% and NSC returns @12% were reasonable. This helped with the initial accumulation of the corpus.
The investment in mutual funds started in 2001. I had realized by then that Mutual Funds investments for wealth creation are a far better strategy than the Post Office savings schemes.
Accordingly, with some advice from the MF advisor, my investment journey began in Mutual Funds. Considering the post-Dot Com year, the first investment was in a Gilt MF. However, the investments were shifted to equity schemes starting in 2003.
The earlier investments in NSC/8% RBI Tax-Free Bonds gradually shifted to Equity Mutual Funds. Further, the savings from increased salary by this time, bonuses, and other allowances were deployed in Equity Mutual Funds either through lump sum investments or regular SIP. This strategy was broadly followed till retirement from the service in the year 2016.
I have been a staunch follower of the “Mutual Funds Sahi Hai” slogan. Investors need to understand the compounding effect of mutual fund investments to reach their desired goals.
There have not been any deviations in regular SIP, and there has been no panic selling/buying during any period of crisis in the equity market. I have stayed invested and continued my SIP investments without any cancellation or pause during the 2008 Lehmann Brothers crisis, the demonetization of 2016 and the pandemic of 2020.
The tax savings planning was also done using the ELSS Tax Saver Mutual Funds and regular PF deductions.
My investments are primarily planned in Diversified Equity Funds, with some thematic and value funds exposure. In 2018-19, I shifted all my previous investments from regular funds to direct funds, taking full advantage of the grandfathered scheme of January 2018 and some fall in the market in 2018-19. My fresh investments post-retirement in 2016 have all been in the direct plans of Mutual Funds.
The money received on retirement, i.e. PF, Gratuity, and Leave encashment, were also deployed in Equity Mutual Funds over 4-6 months. I invested 15 lakhs in SCSS @8.5% for five years, but this amount on maturity was also put in the Mutual Funds.
My current portfolio consists of 75% in Equity Mutual Funds, including a PMS of 50 lakhs started this year. I also have about 5% of my savings exposure in direct stocks, primarily Bluechip Large Cap stocks held over 8-12 years. I am not into short-term trading, although some profit is made on the exceptional rise of a few shares. The remaining 20% of my portfolio is in Hybrid Multi Asset Allocation Funds, Balanced Advantage Funds, and Asset Allocator FOF of ICICI. The emergency fund for six months is in Bank FD.
I have to say that my equity exposure is higher mainly because of my pension from the government and some rental income. As such, I don’t need any monthly income scheme. Moreover, the tax treatment of debt funds has undergone many changes in the recent budget.
I have been disciplined in my investment journey during the initial investment in NSC/RBI Bonds and the last 23 years of Mutual Fund investments. This has enabled me to generate wealth to the tune of 11 crores. I am continuing with SIP from savings.
Through this column, I advise youngsters and people of all ages to consider investments in Mutual Funds to create wealth and fulfil goals. The investments during the accumulation period up to reaching the desired goal should be in Equity MF through Lump Sum and SIP. The investments can be shifted to safe hybrid funds when reaching the goal.
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.
- 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
- 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
- Thirty-eighth audit: How Abhineeth plans to achieve financial independence and build a house.
- Thirty-ninth audit: How Sahil plans to achieve financial independence by efficient tracking
- Fortieth audit: My Journey to a Ten Crore Portfolio
- Forty-first audit: Burdened with debt for several years, I am now aggressively investing in equity
- Forty-second audit: From Engineer to Librarian after Financial Independence and Early Retirement (FIRE)
- Forty-third audit: I lost six months’ income in F&O and ditched it for systematic investing
- Forty-fourth audit: My retirement plan to handle the harsh realities of the IT industry
- Forty-fifth audit: My investment journey: mistakes, 10 years of MF investing and recovery
- Forty-sixth audit: My MF portfolio is worth six crores despite multiple mistakes
- Forty-seventh audit: Saving, Investing, and Running Marathons: My 25-year Journey to Financial Independence
- Forty-eighth audit: Never Too Late to Start: How I Became Financially Savvy at 40
- Forty-ninth audit: My Investment Journey to a net worth 29 times my annual expenses
- Fiftieth audit: How I audit my portfolio without tracking returns
- Fifty-first audit: Financial Lessons Learned During and After a PhD
- Fifty-second audit: Investment & Financial journey of a 23 year old
- Fifty-third audit: The system I use to draw income and spend after retirement securely
- Fifty-fourth audit: From Start-Up Employee to Millionaire: A Success Story of Resilience and Smart Investing
- Fifty-fifth audit: 25-Year-Old Software Engineer’s Investment Journey: From Stocks to Mutual Funds and Beyond
- Fifty-sixth audit: Crossing the Million Mark: Our Journey to the First Crore
- Fifty-seventh audit: Navigating Market Volatility: How an IT Professional Transformed His Investment Approach for Retirement
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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