The year-end personal financial audit

Each December, I conduct a personal financial audit. That is, I take stock of ,

  • financial goals
    • what is the value of my investments for each goal. What is their worth?
    • have I invested what I resolved to invest last December?
    • Will I have enough to invest for all my goals in the year ahead?
    • Review calculations for retirement and all other goals, especially long-term ones.
  • insurance and emergency fund needs/expenses
  • check if I have any big expenses in the year-ahead
  • tax-planning. It is integrated with my financial goals?
  • inflation check. How much have my expenses increased?
  • any other thing that I should worry about!

This time, I thought it may not be a bad idea (hopefully!) to write a post about it.

Note: This post is not to boast or brag about my financial life. It is to urge to you conduct such an audit yourself. If I don't put in my story, I will have say, 'do this' and 'do that'. That would sound preachy. My point is to share with you what I do. If you start to do this yourself, I am sure you will come up with a version best suited to you (and better than mine).

personal financial audit
Image courtesy of Stuart Miles / FreeDigitalPhotos.net".

Financial goals

1. Retirement: This year was a pretty decent year for retirement. Each month, last year I managed to invest 110-120% of my monthly expenses. This year began the same way, but I managed to increase  the monthly investment to more than  175% of monthly expenses.

Each year I must increase my monthly investment by about 10-13%, in order to achieve my targetted retirement corpus I am a couple of years ahead of this schedule.

This means that my financial freedom is about 10-12 years away. Pretty decent, considering retirement is 26 years away (at least on paper).

The advantage of investing as much as possible and as early as possible is, if for some reason investments decrease a few years from now, I can simply rely on my new pension scheme contributions and hope I have the health to retire at 65.

This year, I have already reached that stage.

If I can mange to invest at current levels and delay my retirement, my return expectation on my portfolio can be significantly lowered. I know need only about 9% return from equity.

A lot of ifs and buts. Can't be helped though, that is life.

Asset allocation: Equity 60% (equity MFs) and Debt 40%. No gold, no real estate. Most of the debt comes from my mandatory New Pension Scheme subscription (see here for a performance review) with a little bit of PPF.

If you are wondering how I manage to invest so much, it is because of a frugal life we lead. All credit to my wife for keeping our expenses down.

Calculators used to compute this information

Verdict: Since a hundred things can derail a retirement plan, this is nothing to cheer about. Try to keep expenses down and hope for the best.

2. My sons education. My son turns 4 in January. After 14 years, he will graduate from School. He will turn 18 before  he completes school as got into pre-Kg a year later than others.

Each month I put away about 50-60% of monthly expenses (increasing by 10% each year) for his education in equity MFs and PPF.

Asset allocation: Equity 60%, Debt 40%.

Verdict: As of now I can afford an undergraduate course like a BE/B. Tech. Hopefully I will be able to handle his post-graduate education too, possibly abroad.  If he wants to take up medicine, I would need an education loan. We will cross that bridge when we get to it.

Calculators used to compute this information

3. My sons marriage. This year, I started saving for his marriage expenses. Assuming my son would marry at 25, I should have enough for a frugal wedding.

Asset allocation: Equity: 90%, Debt 10%. No gold. Not optimal, but there is enough time , and this is not a high priority goal. So I would like to worry about this later.

Related post: Do not buy Gold ETFs because you need gold for your child’s marriage!

Those are my long-term goals. I don't have short-term goals at the time of writing. I do have recurring goals, like payment of term insurance, health insurance etc.

Related Calculator:  Recurring Financial Goals Calculator

Life insurance and Health insurance

  • These are in auto-pilot mode. So not much to do here.
  • I have a term insurance from LIC (Amulya Jeevan) and a group term insurance from IITM. Why not cheaper online policies? Why not indeed. Not for me though. Thanks to my Myasthenia Gravis, no one would offer me term policies anymore!
  • For the same reason, my mediclaim premium was loaded this year.

 Tax-planning

The best advantage of being in the highest tax-slab is one does not have to worry much about tax-planning! Section 80 C is taken care by NPS, Section 80CCD by NPS, 80D by mediclaim, 80G with WorldVision, done.

If you need some help planning your taxes, consult this excellent article by Mr. Narendra Kondajii.

Inflation Check  This is the most crucial aspect of this audit. How much have my expenses increased this December compared to last December?  Unfortunately, there is an 11% increase. Partly due to inflation and partly due to lifestyle expenses - mainly medicines for my Myasthenia.

These days I don't do a monthly budget. I make sure I invest enough for all my long-term financial goals and use the rest for expenses.

As a result, within a few days after I receive my salary, my SB account has a low balance.  Which is why I have not been contacted by any relationship manager!

How about you? How often do you take stock of your goals and expenses?

Here is an integrated financial plan creator to evaluate your fiscal fitness. This is the perfect time to take stock of your finances, plan and invest accordingly.

If you are interesed in knowing more about my personal financial journey: The Financial Arrow of Time

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Install Freefincal Retirement Planner App! (Google Play Store)

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104 thoughts on “The year-end personal financial audit

  1. Nihar Pal

    Sir very methodical planning covering all the bases and an eye opener to most of us who are retired. Hv forwarded the article to my son who is a PhD student and hope he follows it...

    Reply
  2. Nihar Pal

    Sir very methodical planning covering all the bases and an eye opener to most of us who are retired. Hv forwarded the article to my son who is a PhD student and hope he follows it...

    Reply
  3. J

    Advisors should do such kind of audits for their clients....Instead of worthless analysis of stocks and MFs...

    clients will see value addition for this kind of year end analysis...and not for finding out next alpha story which doesn't exist in reality. ....

    good going Pattu....

    Reply
    1. pattu

      Thank you. Yes, I see what you mean. For them, actions are client driven. There are many who are impatient and want advisors to deliver returns each year! Hence they recommend fund changes etc.

      Reply
  4. J

    Advisors should do such kind of audits for their clients....Instead of worthless analysis of stocks and MFs...

    clients will see value addition for this kind of year end analysis...and not for finding out next alpha story which doesn't exist in reality. ....

    good going Pattu....

    Reply
    1. pattu

      Thank you. Yes, I see what you mean. For them, actions are client driven. There are many who are impatient and want advisors to deliver returns each year! Hence they recommend fund changes etc.

      Reply
  5. Ramamurthy

    I am not curious.I only would like to benefit from your experience.
    Can you please let us know whether you have invested in equity shares? if so in which sector and since how long? what is your return on equity investments in 2013?

    Reply
    1. pattu

      I hold no stocks, Sir. I just don't understand when to buy and when to sell a stock. It not based on math and I can never understand it.

      Reply
  6. Ramamurthy

    I am not curious.I only would like to benefit from your experience.
    Can you please let us know whether you have invested in equity shares? if so in which sector and since how long? what is your return on equity investments in 2013?

    Reply
    1. pattu

      I hold no stocks, Sir. I just don't understand when to buy and when to sell a stock. It not based on math and I can never understand it.

      Reply
    1. pattu

      I have a different folio for each of my long term goals. For retirement I use, HDFC Equity, FIBCF, QLTE, PPFAS LTVF, FT US Feeder fund (small exposure). I also have an old Canara Robeco Tax saver. I don't invest in it anymore but what I hold is doing well, so I left it in there. I have NPS + small contributions in my PPF and my spouses.

      As for my sons education, I use HDFC Top 200 and ICICI pru discovery with PPF in his name.
      I have exposure in the equity from July 2008, and I have been picking MFs along the way. Not clean and optimised folios, but I am quite okay with it.

      I don't know the returns generated! I review the total value using Moneycontrol and check when I can retire or what I can afford for my sons education and leave it at that. Some MFs has give good returns and some not so good, but I am not one to change MFs so easily. My returns expectations are quite low and I invest a little more than I need. So all in all I should be reasonably okay.

      Reply
    1. pattu

      I have a different folio for each of my long term goals. For retirement I use, HDFC Equity, FIBCF, QLTE, PPFAS LTVF, FT US Feeder fund (small exposure). I also have an old Canara Robeco Tax saver. I don't invest in it anymore but what I hold is doing well, so I left it in there. I have NPS + small contributions in my PPF and my spouses.

      As for my sons education, I use HDFC Top 200 and ICICI pru discovery with PPF in his name.
      I have exposure in the equity from July 2008, and I have been picking MFs along the way. Not clean and optimised folios, but I am quite okay with it.

      I don't know the returns generated! I review the total value using Moneycontrol and check when I can retire or what I can afford for my sons education and leave it at that. Some MFs has give good returns and some not so good, but I am not one to change MFs so easily. My returns expectations are quite low and I invest a little more than I need. So all in all I should be reasonably okay.

      Reply
  7. sunder

    pattu, U R GR8. not only planning to the last decimal point, also letting others know the details so that they can do the same. WOW. Keep it up, please.

    Reply
  8. sunder

    pattu, U R GR8. not only planning to the last decimal point, also letting others know the details so that they can do the same. WOW. Keep it up, please.

    Reply
    1. pattu

      Thanks Ashal. I get your point. As Narendra Kondajii says, we need to do what we do and hope for the best. This is also like compounding. Initially it appears like no one is listening, but slowly more and more people take notice and more importantly understand the key aspects of a post or of a blog.

      Reply
    1. pattu

      Thanks Ashal. I get your point. As Narendra Kondajii says, we need to do what we do and hope for the best. This is also like compounding. Initially it appears like no one is listening, but slowly more and more people take notice and more importantly understand the key aspects of a post or of a blog.

      Reply
  9. marina subrahmanyeswara rao

    Good self review of one's financial life. It's subjective as well as objective.
    Nothing to loose by following this, only all gains.
    Beginning may b scary but the ending will b happy.
    ThanX a zillion pattu ji.

    Reply
  10. marina subrahmanyeswara rao

    Good self review of one's financial life. It's subjective as well as objective.
    Nothing to loose by following this, only all gains.
    Beginning may b scary but the ending will b happy.
    ThanX a zillion pattu ji.

    Reply
    1. pattu

      Each month about 1/3 of my retirement investment goes to NPS. Which has 85% debt paper. Bank certificates, Corporate certificates, govt bonds etc. You can see my NPS performance post for the details.
      I have 3 PPF accounts. Mine and my wives accounts are linked to retirement and my sons account for his education. I put in close to 1L in my sons account per year and only about 500 each in other PPF accounts. Once I hit 45, I intend to max the PPF accounts.
      Down the line I will need to use a debt income fund if I need to rebalance the portfolio.

      Reply
    1. pattu

      Each month about 1/3 of my retirement investment goes to NPS. Which has 85% debt paper. Bank certificates, Corporate certificates, govt bonds etc. You can see my NPS performance post for the details.
      I have 3 PPF accounts. Mine and my wives accounts are linked to retirement and my sons account for his education. I put in close to 1L in my sons account per year and only about 500 each in other PPF accounts. Once I hit 45, I intend to max the PPF accounts.
      Down the line I will need to use a debt income fund if I need to rebalance the portfolio.

      Reply
  11. rajanikant v gajjar

    Respected Sir,
    You typically reflect average,conservative but prudent middle class indian.
    I agree with most of your views.
    Your style of presenting your own story is perfect,it relates more to us in a way of compare & contrast of our own story.
    JUST KEEP IT UP,IT IS A GOOD JOB DONE.
    DR RAJANIKANT V GAJJAR
    BHARUCH GUJARAT

    Reply
  12. rajanikant v gajjar

    Respected Sir,
    You typically reflect average,conservative but prudent middle class indian.
    I agree with most of your views.
    Your style of presenting your own story is perfect,it relates more to us in a way of compare & contrast of our own story.
    JUST KEEP IT UP,IT IS A GOOD JOB DONE.
    DR RAJANIKANT V GAJJAR
    BHARUCH GUJARAT

    Reply
  13. Ramesh

    This is as simple and sophisticated as it can be. Brilliant.

    1. Investing in what you know and not investing in what you don't know (direct stocks, gold and realestate). Perfect.
    2. VRO does give you a total return on the portfolio. But yes putting the inputs again is tedious. You can also check morningstar now that you have 2 international funds - they have some unique things in theirs.
    3. What is your strategy for actual allocation into your retirement funds? Is it some fixed percentage going in or a fixed percentage of the total portfolio? Since now you are into monthly lumpsums and not monthly fixed SIPs.

    Thanks for your post.

    Reply
    1. pattu

      Thank Ramesh. Yes I tried the Vronline folio and have also used my files to calculate the returns. I think MF investors, especially SIP investors should not calculate returns often. It will only depress them and make them want to change funds.
      For ex. my HDFC equity had given me 4% a couple of months ago, after 3 years of monthly investing. It has recently picked up. So I am glad I held on to it. Same with top 200.

      I think it is better to evaluate goals in terms of what a corpus can do at any point of time. As long as that is reasonable, I think we should leave it at that. Returns will trigger emotions.

      So we need to develop a sense of maturity before we look at returns. Also in my case I only wanted 10% from equity to start with. If someone wants 14% they will get jittery each time they calculate returns and find that it is well below that.

      Anyway my automated MF portfolio tracker is nearly complete. So in a way I am forced to access returns with it before I post it!
      I hope to develop an efficient goal tracker along the lines of the post.

      For all my goals I have a target amount with respect to my takehome pay. I ensure I invest that much each month. If I get a little extra, that goes into retirement as well.

      Reply
  14. Ramesh

    This is as simple and sophisticated as it can be. Brilliant.

    1. Investing in what you know and not investing in what you don't know (direct stocks, gold and realestate). Perfect.
    2. VRO does give you a total return on the portfolio. But yes putting the inputs again is tedious. You can also check morningstar now that you have 2 international funds - they have some unique things in theirs.
    3. What is your strategy for actual allocation into your retirement funds? Is it some fixed percentage going in or a fixed percentage of the total portfolio? Since now you are into monthly lumpsums and not monthly fixed SIPs.

    Thanks for your post.

    Reply
    1. pattu

      Thank Ramesh. Yes I tried the Vronline folio and have also used my files to calculate the returns. I think MF investors, especially SIP investors should not calculate returns often. It will only depress them and make them want to change funds.
      For ex. my HDFC equity had given me 4% a couple of months ago, after 3 years of monthly investing. It has recently picked up. So I am glad I held on to it. Same with top 200.

      I think it is better to evaluate goals in terms of what a corpus can do at any point of time. As long as that is reasonable, I think we should leave it at that. Returns will trigger emotions.

      So we need to develop a sense of maturity before we look at returns. Also in my case I only wanted 10% from equity to start with. If someone wants 14% they will get jittery each time they calculate returns and find that it is well below that.

      Anyway my automated MF portfolio tracker is nearly complete. So in a way I am forced to access returns with it before I post it!
      I hope to develop an efficient goal tracker along the lines of the post.

      For all my goals I have a target amount with respect to my takehome pay. I ensure I invest that much each month. If I get a little extra, that goes into retirement as well.

      Reply
  15. Ramesh

    No. I was asking if you have divided the money going into the retirement kitty in a particular manner, since you have many funds in that.

    Reply
    1. pattu

      Sorry I misunderstood. It is still pretty dynamic. Earlier I had HDFC Equity and FIBCF with more in FIBCF. Soon I realised that I was simply tracking the index and wanted more downside protection. QLTE did this to a certain extent. Diversification with the FT US Feeder made it a little better. I only regret investing in this late. When PPFAS came along, I started investing more in it.
      Still need to optimise the diversification. I think , if we have 4 funds, at least one of them should gain or at least not lose much each day irrespective of the state of Sensex/Nifty. To a certain extent this is happening with the inclusion of QLTE, FT feeder and PPFAS. PPFAS in particular does a great job of being out of step with the Sensex!

      Reply
  16. Ramesh

    No. I was asking if you have divided the money going into the retirement kitty in a particular manner, since you have many funds in that.

    Reply
    1. pattu

      Sorry I misunderstood. It is still pretty dynamic. Earlier I had HDFC Equity and FIBCF with more in FIBCF. Soon I realised that I was simply tracking the index and wanted more downside protection. QLTE did this to a certain extent. Diversification with the FT US Feeder made it a little better. I only regret investing in this late. When PPFAS came along, I started investing more in it.
      Still need to optimise the diversification. I think , if we have 4 funds, at least one of them should gain or at least not lose much each day irrespective of the state of Sensex/Nifty. To a certain extent this is happening with the inclusion of QLTE, FT feeder and PPFAS. PPFAS in particular does a great job of being out of step with the Sensex!

      Reply
  17. Viren Phansalkar

    WordPress should have option to upload image. I would have uploaded image of hats-off or bow to you Sir. I do similar kind of thing but do not calculate returns, as that would make me little impatient with the fund. I just see if my investment amount is upto the mark and i am following my ratio of equity to debt. Off-course, with the word 'similar' I meant remotely similar and not anywhere near to you.

    Reply
    1. pattu

      Many thanks Viren, 🙂 I agree with you that monitoring returns each year is not healthy. What you do sounds perfect. Thanks for sharing.

      Reply
  18. Viren Phansalkar

    WordPress should have option to upload image. I would have uploaded image of hats-off or bow to you Sir. I do similar kind of thing but do not calculate returns, as that would make me little impatient with the fund. I just see if my investment amount is upto the mark and i am following my ratio of equity to debt. Off-course, with the word 'similar' I meant remotely similar and not anywhere near to you.

    Reply
    1. pattu

      Many thanks Viren, 🙂 I agree with you that monitoring returns each year is not healthy. What you do sounds perfect. Thanks for sharing.

      Reply
  19. Ramesh

    May be you should look deeper into this aspect.

    Eg. you have a large cap growth fund (FIBCF), a growth oriented large cap dominated multicap fund (HDFC Eq), a slightly value-oriented multicap fund (QLTE) and another value-tilted non-large cap multicap fund with international exposure (EU dominated, last I saw). Plus you have a US based fund.

    So, you can have a look at an option like 22.5% of total to HDFC Eq, 22.5% to FIBC, 22.5% to QLTE, 22.5% to PPFAS and 10% to US feeder. This actually gives you 45% to growth, 45% to value and 10% to US's style. Also, the international exposure in this is 17.5% (22.5/3 + 10).

    This is just an example and basically more of a cookie cutter solution. You can apply some more thought on this basic idea and have a proper division which optimizes things in a better manner.

    Same thing can be applied to the child education and child marriage subgroups.

    Also, you have to take into consideration the equity component of your NPS (if it is there), which is just the Nifty stocks into the appropriate group / style.

    Reply
    1. pattu

      That is indeed a smart solution. Ramesh. Many thanks. Since I don't have SIPs, it is easy enough for me to shift around. At present, I have each month about 23% in FIBCF, 30% in QLTE, 14% in HDFC Equity and rest bet (~25%) PPFAS and (~5-7%) FT feeder. Let me dig a little deeper and realign it as you suggested. Many thanks.

      Reply
  20. Ramesh

    May be you should look deeper into this aspect.

    Eg. you have a large cap growth fund (FIBCF), a growth oriented large cap dominated multicap fund (HDFC Eq), a slightly value-oriented multicap fund (QLTE) and another value-tilted non-large cap multicap fund with international exposure (EU dominated, last I saw). Plus you have a US based fund.

    So, you can have a look at an option like 22.5% of total to HDFC Eq, 22.5% to FIBC, 22.5% to QLTE, 22.5% to PPFAS and 10% to US feeder. This actually gives you 45% to growth, 45% to value and 10% to US's style. Also, the international exposure in this is 17.5% (22.5/3 + 10).

    This is just an example and basically more of a cookie cutter solution. You can apply some more thought on this basic idea and have a proper division which optimizes things in a better manner.

    Same thing can be applied to the child education and child marriage subgroups.

    Also, you have to take into consideration the equity component of your NPS (if it is there), which is just the Nifty stocks into the appropriate group / style.

    Reply
    1. pattu

      That is indeed a smart solution. Ramesh. Many thanks. Since I don't have SIPs, it is easy enough for me to shift around. At present, I have each month about 23% in FIBCF, 30% in QLTE, 14% in HDFC Equity and rest bet (~25%) PPFAS and (~5-7%) FT feeder. Let me dig a little deeper and realign it as you suggested. Many thanks.

      Reply
  21. Prasanna

    Dear Pattu - I have always enjoyed reading your posts. The timing of this post is perfect if readers consider this as a part of planning for the new year. Just one suggestion - You have taken several key decisions when you first started planning - e.g. your preferred asset allocation is a mix of equity/debt with zero real estate, decisions about term insurance, balanced life stye etc. Maybe readers can create a set of guiding principles and then go about creating a financial plan. IMHO appropriate asset allocation makes all the difference.

    Finally - regarding the MF, I see that you have invested in PPFAS. No doubt the pedigree of the fund has played a key role. But given the extremely short track record of the fund, I wonder if you should consider some other established fund (particularly given your reluctance to change funds often).

    All in all a terrific post with great supporting links. Wish you a great 2014 !!

    regards
    Prasanna

    Reply
    1. pattu

      Thank you very much. I agree with you asset allocation makes all the difference.

      As regards PPFAS, I didn't go by pedigree. I knew the fund is not managed by Parag. I liked the fund document which said they can invest in just about anything from national equity/arbitrage/ international equity/debt/cash. The fund is benchmarked against the CNX 500 and given their style I knew they will pick unconventional stocks. I was looking for diversification and a style which did not match the nifty or sensex. So I chose the fund. Also, the fact that Parag has invested about 6-7 Crs of his wealth in his fund helped! As the only fund, I think there is a lot at stake and I expect decent management. So I made an exception and invested in the NFO. So far, pretty, pretty good. I will keep a close watch though.

      Thank you. Wish you a great 2014 too.

      Reply
  22. Prasanna

    Dear Pattu - I have always enjoyed reading your posts. The timing of this post is perfect if readers consider this as a part of planning for the new year. Just one suggestion - You have taken several key decisions when you first started planning - e.g. your preferred asset allocation is a mix of equity/debt with zero real estate, decisions about term insurance, balanced life stye etc. Maybe readers can create a set of guiding principles and then go about creating a financial plan. IMHO appropriate asset allocation makes all the difference.

    Finally - regarding the MF, I see that you have invested in PPFAS. No doubt the pedigree of the fund has played a key role. But given the extremely short track record of the fund, I wonder if you should consider some other established fund (particularly given your reluctance to change funds often).

    All in all a terrific post with great supporting links. Wish you a great 2014 !!

    regards
    Prasanna

    Reply
    1. pattu

      Thank you very much. I agree with you asset allocation makes all the difference.

      As regards PPFAS, I didn't go by pedigree. I knew the fund is not managed by Parag. I liked the fund document which said they can invest in just about anything from national equity/arbitrage/ international equity/debt/cash. The fund is benchmarked against the CNX 500 and given their style I knew they will pick unconventional stocks. I was looking for diversification and a style which did not match the nifty or sensex. So I chose the fund. Also, the fact that Parag has invested about 6-7 Crs of his wealth in his fund helped! As the only fund, I think there is a lot at stake and I expect decent management. So I made an exception and invested in the NFO. So far, pretty, pretty good. I will keep a close watch though.

      Thank you. Wish you a great 2014 too.

      Reply
  23. Srikanth Shankar Matrubai

    As always Excellent Article Pattu.
    Hats off!
    Dont you think you are missing strong consistent performers like BNP Paribas. You seem to stick old fashion funds like HDFC and Franklin inspite of their pretty indifferent performance.
    Mind you, this indifferent performance has been become quite regular for my comfort.

    And, also, if you do not go by pedigree, I strongly advise you to look at Edelweiss EDGE Top 100 Fund and their Prepaid SIP concept.

    http://stockmusings.com/edelweiss-prepaid-sip-details/

    I would love to have your valued opinion on this

    Thanks once again.

    May God bless you with happiness and increase your tribe

    Reply
    1. pattu

      Many thanks Srikanth. I am indeed lucky that an experienced stock and MF advisor like you is offering your views on my folio. I think you are referring to BNP Midcap. That has indeed done well.

      I agree with your point that funds with non-star fund managers tend to do well.

      I suffer from investor inertia to a certain extent. I would like to give the funds a little more slack, at least a little after the elections to make a call.

      Reg. the prepaid concept it is a good idea. I would prefer to do this from SB account. I am not a fan of STPs as they can be an tax headache.

      I am doing this each month. I don't have SIPs. I wait for the day the index drops by 1-2% and invest that day. Not saying this is a good idea, but at least it seems like some sort of regimen to follow.

      I looked at the egde top 100. It has done well to beat the Nifty since 2009. I would give it a little more time to perform though.

      Thank you very much.

      Reply
  24. Srikanth Shankar Matrubai

    As always Excellent Article Pattu.
    Hats off!
    Dont you think you are missing strong consistent performers like BNP Paribas. You seem to stick old fashion funds like HDFC and Franklin inspite of their pretty indifferent performance.
    Mind you, this indifferent performance has been become quite regular for my comfort.

    And, also, if you do not go by pedigree, I strongly advise you to look at Edelweiss EDGE Top 100 Fund and their Prepaid SIP concept.

    http://stockmusings.com/edelweiss-prepaid-sip-details/

    I would love to have your valued opinion on this

    Thanks once again.

    May God bless you with happiness and increase your tribe

    Reply
    1. pattu

      Many thanks Srikanth. I am indeed lucky that an experienced stock and MF advisor like you is offering your views on my folio. I think you are referring to BNP Midcap. That has indeed done well.

      I agree with your point that funds with non-star fund managers tend to do well.

      I suffer from investor inertia to a certain extent. I would like to give the funds a little more slack, at least a little after the elections to make a call.

      Reg. the prepaid concept it is a good idea. I would prefer to do this from SB account. I am not a fan of STPs as they can be an tax headache.

      I am doing this each month. I don't have SIPs. I wait for the day the index drops by 1-2% and invest that day. Not saying this is a good idea, but at least it seems like some sort of regimen to follow.

      I looked at the egde top 100. It has done well to beat the Nifty since 2009. I would give it a little more time to perform though.

      Thank you very much.

      Reply
  25. Nitin

    Ahh...you triggered me to do similar analysis. I used two pointers to audit: 1) Saving %age of Income 2) Saving %age of avg. expense.

    Pretty interesting insight ! Thanks for your writeup.

    Just one query: If you are tracking your expense regularly, can you calculate the actual inflation numbers impacting your expense lets say food category and non-food category?

    Reply
    1. pattu

      Hi Nitin, oh yes you can calculate inflation for each category. I have the data since 2007, will take a look.

      Reply
  26. Nitin

    Ahh...you triggered me to do similar analysis. I used two pointers to audit: 1) Saving %age of Income 2) Saving %age of avg. expense.

    Pretty interesting insight ! Thanks for your writeup.

    Just one query: If you are tracking your expense regularly, can you calculate the actual inflation numbers impacting your expense lets say food category and non-food category?

    Reply
    1. pattu

      Hi Nitin, oh yes you can calculate inflation for each category. I have the data since 2007, will take a look.

      Reply
  27. Nitin

    Thats not actual data tracked individually i guess. The data released by Gov. is of little use since what they track is seldom reflected in our daily life impact.

    Reply
  28. Nitin

    Thats not actual data tracked individually i guess. The data released by Gov. is of little use since what they track is seldom reflected in our daily life impact.

    Reply
  29. Ramamurthy

    Keeping track of our individual expenses and calculating our own inlfation index is rather tough because our life style may change.Perhaps you may have t track only the core expenses,like Provisions,Milk.,Utilities,Domestic Help etc

    Reply
  30. Ramamurthy

    Keeping track of our individual expenses and calculating our own inlfation index is rather tough because our life style may change.Perhaps you may have t track only the core expenses,like Provisions,Milk.,Utilities,Domestic Help etc

    Reply
  31. Arun

    Just a quick question/comment.

    Sometimes, when I look at the smaller fund-houses like PPFAS/Quantum, I wonder if there is additional risk due to any SEBI ruling (like Mr.Subra says, they may bat for the big guys). For instance, SEBI seems intent on raising the AMC's net worth requirement to 100 crores from the current 10 crores. Of course, the smaller guys are complaining - Mr. Parag Parikh and Mr. Jimmy Patel (Quantum CEO) have written articles about how this net worth rule is bad.

    Would you have any thoughts on what might happen if this comes to pass since you have personally invested in these?

    When I see the Morgan Stanley and Fidelity exits, I am kind of concerned about this.

    Thanks!
    Arun

    Reply
    1. pattu

      Hi Arun, At the cost of sounding dumb and preachy at the same time, here goes.

      Dumb because this net worth talk is news to me. I don't follow financial news and latest developments much. I won't be surprised if SEBI pulled something like that. Some say that the main reason Parag got into MFs is because of the 25L rule for PMS.
      Lat year I could distribute MFS and make a financial plan for you. This year I need to make a choice as per SEBI. So anything could happen.

      If it does, someone will take over from these AMCs. We will wait and watch, see how the new management performs and then make a call.

      I am firmly convinced (I will soon have the data to support this) that 75% of MFs in India are capable of beating inflation in the long run. So as long as we don't get stuck in the bottom 25%, I think we are fine.
      So let us cross that bridge when we get to it.

      Reply
  32. Arun

    Just a quick question/comment.

    Sometimes, when I look at the smaller fund-houses like PPFAS/Quantum, I wonder if there is additional risk due to any SEBI ruling (like Mr.Subra says, they may bat for the big guys). For instance, SEBI seems intent on raising the AMC's net worth requirement to 100 crores from the current 10 crores. Of course, the smaller guys are complaining - Mr. Parag Parikh and Mr. Jimmy Patel (Quantum CEO) have written articles about how this net worth rule is bad.

    Would you have any thoughts on what might happen if this comes to pass since you have personally invested in these?

    When I see the Morgan Stanley and Fidelity exits, I am kind of concerned about this.

    Thanks!
    Arun

    Reply
    1. pattu

      Hi Arun, At the cost of sounding dumb and preachy at the same time, here goes.

      Dumb because this net worth talk is news to me. I don't follow financial news and latest developments much. I won't be surprised if SEBI pulled something like that. Some say that the main reason Parag got into MFs is because of the 25L rule for PMS.
      Lat year I could distribute MFS and make a financial plan for you. This year I need to make a choice as per SEBI. So anything could happen.

      If it does, someone will take over from these AMCs. We will wait and watch, see how the new management performs and then make a call.

      I am firmly convinced (I will soon have the data to support this) that 75% of MFs in India are capable of beating inflation in the long run. So as long as we don't get stuck in the bottom 25%, I think we are fine.
      So let us cross that bridge when we get to it.

      Reply
  33. R Swaminathan

    I appreciate your concerns for downside protection and diversification which I also have been striving for. But I think that the selection of PPFAS is contrary to the above needs because PPFAS to begin with is a mid and small cap fund. And among the mid cap funds , it is the most concentrated fund with only about 18 indian stocks ( and top 10 stocks contribute to 51%, top 5 stocks contribute to 28% and top 3 sectors contribute to 56% ( Data from VRO). So it may give a big boost to the returns or also bring down the returns sharply depending on the way markets will be at the time of redemption. If you compare the HDFC midcap oppurtunities on the same parameters - it has 64 stocks, and the top 10% contribute to only 30%, top 5 stocks contribute to only 17 % and top 3 sectors contribute to only 41%. Hence, this fund is likely to give a betterr downside protection. This was the reason why I initially chose to invest in PPFAs based on the media hype and then backed out at the last minute.
    I just felt my reasons for not choosing PPFAs may be useful and hence I have expressed them.

    Reply
    1. pattu

      Thank you for your views. I appreciate them. Yes, I agree that PPFAS is a risky and unconventional choice. PPFASs folio is not limited to mid-caps/small-caps alone. It can invest in international equity too. So we cannot compare it to any other typical mid-cap fund.

      You are looking for diversification within a fund. I am looking for diversification in the folio.

      Like I mentioned, I was looking for a fund that behaves out of step with the market. So I went with PPFAS. Obviously it is too early to say if I made the right choice or not. I am willing to take the risk associated with a concentrated folio since I have time on my side, and I am not one to make kneejerk fund changes. So I am going to wait and watch.

      Thank you for sharing your views. I appreciate it. All said, HDFC midcap opportunities is a pretty decent fund by any standard.

      Reply
  34. R Swaminathan

    I appreciate your concerns for downside protection and diversification which I also have been striving for. But I think that the selection of PPFAS is contrary to the above needs because PPFAS to begin with is a mid and small cap fund. And among the mid cap funds , it is the most concentrated fund with only about 18 indian stocks ( and top 10 stocks contribute to 51%, top 5 stocks contribute to 28% and top 3 sectors contribute to 56% ( Data from VRO). So it may give a big boost to the returns or also bring down the returns sharply depending on the way markets will be at the time of redemption. If you compare the HDFC midcap oppurtunities on the same parameters - it has 64 stocks, and the top 10% contribute to only 30%, top 5 stocks contribute to only 17 % and top 3 sectors contribute to only 41%. Hence, this fund is likely to give a betterr downside protection. This was the reason why I initially chose to invest in PPFAs based on the media hype and then backed out at the last minute.
    I just felt my reasons for not choosing PPFAs may be useful and hence I have expressed them.

    Reply
    1. pattu

      Thank you for your views. I appreciate them. Yes, I agree that PPFAS is a risky and unconventional choice. PPFASs folio is not limited to mid-caps/small-caps alone. It can invest in international equity too. So we cannot compare it to any other typical mid-cap fund.

      You are looking for diversification within a fund. I am looking for diversification in the folio.

      Like I mentioned, I was looking for a fund that behaves out of step with the market. So I went with PPFAS. Obviously it is too early to say if I made the right choice or not. I am willing to take the risk associated with a concentrated folio since I have time on my side, and I am not one to make kneejerk fund changes. So I am going to wait and watch.

      Thank you for sharing your views. I appreciate it. All said, HDFC midcap opportunities is a pretty decent fund by any standard.

      Reply
  35. NATARAJAN

    The Best Post/ Blog of the year 2014. 🙂 A step by step process for every individual (to-do). stay blessed prof. pattu.

    Reply
  36. NATARAJAN

    The Best Post/ Blog of the year 2014. 🙂 A step by step process for every individual (to-do). stay blessed prof. pattu.

    Reply

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