My financial journey: How I missed the Compounding Bus!

Published on / By M. Pattabiraman Twitter: @pattufreefincal

Published: March 9, 2025 at 6:00 am

In this edition of the reader story, a reader bravely shares his mistakes, hoping that younger people will not repeat them.
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 also have a “mutual fund success stories” series. See, for example, how mutual funds helped me achieve financial independence. Now, over to the reader.

Let me start by saying I am a big admirer of yours, especially your financial journey, which went from minus three lakhs to what you have achieved today.

I just wanted to share my financial journey with you as there are some striking similarities and, at the same time, huge differences.
I started investing around 2007 in 5 Mutual Funds. I continued investing till 2011 in SIPS. I understand that it keeps moving sideways when you talk about the market between 2008 and 2013.
Exactly 6 months before the 2014 elections, I encashed my portfolio (for approx. 26 lakhs – talk about bad timing) as I did not see it going anywhere. Unfortunately, there was no one to explain how the equity markets work/the compounding effect that happens with time, and that you need to give 15-20 years for the results to show.
In hindsight, it is fantastic to see what I could have achieved if I had had the same portfolio today – with no additional investment, my original INR 16 lakhs investment would have been worth close to 1.8CR.

Unfortunately, age is no longer on my side. I am pretty much at the fag end of my career, close to retirement, turned 60 in Nov 2024. I am an NRI and have worked in Dubai for 32 years. In terms of investments, since the last few years, I have gone very conservative…with nearly all my cash as FDs.

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My net worth now is approx.  2.84 CR, break up of which is 1.2CR as NRE FDs (Zero tax), 13 Lakhs as NRO FDs, six lakhs in savings account, another 1CR as FCNR USD FDs (so no tax) and 45 lakhs approx, in my UAE account. I also have a property that is probably worth nearly 3CR in Mumbai today (again, bad timing. I bought a premium builder property in Chembur in 2016 for approximately 2.39 Cr with no substantial increment over the last 9 years). This property gives me an annual rental of nearly INR 10.2 lakhs.
So, despite these blunders, I am pretty okay with my retirement corpus. I can afford a middle-class lifestyle, preferably in a tier 2 city…that is the plan. Even if I must retire today, I hope to manage with a monthly expense of approx. 1.5 lakhs per month (which will come from my rental income and the rest from fixed income with either the FDs, POIMS, SCSS, etc.)
At the same time, I hope to keep working here for another 3-4 years (till age 65), hoping to add more to my retirement corpus. Thankfully, I have no debt. My daughter will finish her PG course this year, and my son is currently doing his graduation (another 4 years).
After hearing all about the dreaded inflation and with all my money in FDs (earning 7%+), I have finally started a SIP of approx. 1 lakh per month ( since Oct 2024) for the next 2 years with approx. 20 lakhs cash that I have). This is split with 50% going to UTI NIFTY 50 Index Fund Direct Plan-Growth, 30% in ICICI Prudential Nifty Next 50 Index Fund – Direct Plan-Growth and the balance 20 % in Parag Parikh Flexi Cap Fund – Direct Plan.  I am looking at a long-term horizon of at least 10 years.
I did invest for 3 months (Oct-Dec 2024) but stopped after that as now the market has gone bearish and since been on a downfall (I know catching the market in a downfall is impossible). Still, I was hoping to get some leverage from the falling markets and, therefore, have skipped my last two SIPS – Jan & Feb 2025).
Editor’s note: The reader added the following After the initial write-up. We have advised the reader to work with one of the flat-fee-only SEBI registered investment advisors from our curated list.
Part of the money that I divested and received from these equity MFs and sold my property in Bengaluru was parked by property developers close to the extended family. Rate of return – approx. 24%. They had an unbroken record over the last 25 years (till Mar 2018), of uninterrupted regular monthly payments, right on the day promised. Unfortunately, that money dried up after demonetisation, RERA implementation, and GST thereafter.
To cut a long story short, approx. INR 1.85CR, the principal amount between my wife and me, is now stuck with these two cos. All these payments were made by cheque.  What I received in interest payments between 2011 and 2018 amounted to a little over 1CR (another way of consoling myself….I have more or less recovered my principal amount, but otherwise, it was a dead investment).  Thank you once again for your time.

Reader stories published earlier:

As regular readers may know, we publish a personal financial audit each December – this is the 2023 edition: Portfolio Audit 2023: 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.