In this edition of the reader story, we meet 30-year old Phanindra. He explains how his style of money management changed from buying interesting or apparently useful products to building a robust goal-based investment strategy. This is the 31st such article published here.
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 their investing journey. See, for example, this piece by a 29-year old: How I track financial goals without worrying about returns.
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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 the author.
Hello readers, first of all, I would like to thank Pattu sir for providing a platform to share my investment journey with fellow DIY investors. My journey is identical to scores of Indians: complete a BE and join a tech company.
My parents never wanted anything from me after I started earning. All they said was, “Unlike us, you are in a position where you have some extra money each month. Be wise and frugal with it. Learn how to save it. Do not try to fit in with others using money”
Thankfully, I was frugal by nature but for almost six years after I started earning, I did not learn about saving or investing in a structured manner. I made the standard and usual money mistakes based on office chit-chat: Buy products only for tax savings – endowment policies, Ulips, ELSS funds, and NPS too!
It is by chance I stumbled upon freefincal three years ago and realised the mistakes I was making. I read Re-assemble Step by step money management basics (free e-bok) and rigorously follow the steps. I then joined the goal-based portfolio management course and developed an investment strategy.
The biggest mistake I made was chasing after products: for tax savings or tax-free gains; for better returns without understanding terms and conditions etc. I recognised the benefits of a process-driven approach.
I listed my goals and tagged my investments to them. Each time I invest, I invest for that goal not for X or Y return and not for saving tax. Once we focus on the corpus necessary for our goal, we can happily ignore fluctuating returns or market developments. This process-driven approach has given me peace of mind.
I got married two years ago. My wife is a reporter. We have not yet decided about children but realise we have to do so quickly. For now, we only have one goal – financial freedom.
Since I followed goal-based investing only two years ago, about 70% of my money is in EPF and some small amounts in NPS and PPF. I only keep the NPS and PPF accounts alive each year. I got rid of my endowment policies and ULIPs after reading re-assemble and got a term insurance cover.
I prefer to focus on investing as much as possible in equity funds. “Invest as much as possible each month without getting bogged down with SIPs” is another useful piece of advice from Pattu sir.
Last year I switched to the new tax regime and bade goodbye to section 80C.
I like hybrid funds and use Mirae Asset Equity Hybrid Fund and ICICI Multi-asset fund (roughly same weights).
Our goal is to holiday abroad at least once in three years. So we save a small amount for this each year in an RD.
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!
- 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 aim to hold 60% equity for retirement
- Twenty-ninth audit: My journey: From 5 lakhs in debt to building a corpus worth 6 years in retirement
- Thirtieth audit: My investment journey: From random purchases to a goal-based portfolio
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.