In this edition of the reader story, Sanjoy shares his investment mistakes and lessons learned. In a previous article, he discussed the Financial Lessons Learned During and After a PhD
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 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 reader.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
Just 3 years ago, I was starting a new job in India after a short stay abroad, my first and only job ever, and I was set out to be a bombastic investor. In the USA, I heard the market jumping every day after COVID-19. I remember the famous ads for ‘money Chintamani’ from childhood and for a prominent mutual fund house, but I never understood what they were. I also saw ads for a swing with two adults showing a balanced advantage fund, but I had no idea what it was. While writing this, I realized I don’t know what ‘mutual’ in MFs is. Not knowing has no end, but there is always an opportunity to ask the right question.
In April of 2021, I knew everyone was making money, and I also had to get on the bandwagon. I was so stupid and did so many things that I doubt people will know they exist. However, being a coward too, I was always into well-regulated products and never touched forex trading, foreign currency investing or crypto. All my mistakes will forever stay in records, haunting and teaching me forever. The mistakes listed below didn’t happen sequentially. They happened in parallel and over some time.
Mistake 1 – Investment Services Account / Browsing NetBanking for Life Goals
Most current readers, YouTubers and finance experts will not know or wouldn’t have told you what an ISA (Investment Services Account) is. However, I found this easy investment option through my netbanking portal and found I can invest in any fund. Of course, I had to open an account and invest in the highest-return Healthcare fund. Nearly a year later, when I understood the standing 1000 INR yearly fees for the account (basically a tab in your netbanking portal) and regular funds sold to me, I was awakened. After a lot of stress, I got a PDF form from a bank email and signed on it and posted to the local branch as well as the main branch to close it and thankfully succeeded.
At least the ISA allowed me to invest in other AMCs funds. There are several banks offering MF investment through their bank app / netbanking only to their own AMC. In that case, not only they get your TER, they also enjoy being your MF distributor selling you a MF. Banks also sneakily insert ULIP and other ‘Life Goal’ or ‘Annuity’ products in their portal. Nothing is worse than a ‘Relationship Manager’ (RM) who can’t tolerate high bank balances in your account and shall call you with ‘ideas’ at no hesitation. However, when you need a small favor, your odds of praying to God is better than relying on a RM.
Mistake 2 – Absolute ignorance of the product
Before I knew what NIFTY or market or market-cap was, I had a direct AMC account with 7 funds in my portfolio among which 2 were debt funds and I didn’t know it. The choice of debt funds must have been due to the short burst of return amplified by rate-cuts which I understand (do I?) but I had no clue then. Other 5 funds also were all large-cap variations e.g., ESG, Equity hybrid, NIFTY index and Bluechip funds. Truth be told, I had no idea of their variations except names. It may sound like exaggeration, I had no clue of direct / regular investment and I remember choosing a regular fund once but couldn’t proceed as it asked some additional information before investing (ARN) which I had no clue about and then redirected myself to invest in only direct funds. What can I say, I wanted a regular life like everyone else.
Mistake 3 – The pandora of demat investing
How can I stay away from this fad? Can I? Of course not. AMC websites are lame, they give you access to only that AMC. Demat accounts with ‘Direct’ option allows you to invest in any and every MF. I doubt some of the hottest AMCs at this point of time would have gathered so much AUMs if not for the fintechs. If people had to make new accounts to invest in these AMCs, they would still have AUMs smaller than a nickel. Before I faced my first demat charges (3 months I mean to say), I had 12 funds including a FoF and 11 of small / midcap funds because large-caps were lame already.
Most people invest through fintechs, which are younger than the kids who find it suitable to call me uncle on the road. However, I have found peace and comfort with the AMC website. It is too many passwords to handle, but I can tolerate it. If I can’t manage a few passwords, what will I do in life? It is also a psychological barrier to hunt for new winners everyday. It really forces you to work so you really think about it. I doubt I can handle my retirement which I presume will be a significant sum to rely on fintechs whose regulation status is not yet decided, who are not making money in my transactions and taking a loss for market acquisition.
Mistake 4, 5 to Infinity – Tips
Listening to people, people who do this for adrenaline, gossip and timepass is the greatest trap. Listen to people, there is no wrong. Listen to all. Soon you shall discover people who have been investing in markets longer than Sensex / NIFTY existed, people who have seen all things. The wisdom of an older person can barely be beaten by ‘Top 3 Stocks’ videos. Listen to women who have sat in the advisory boards of SEBI have made this product as safe as it can be today and continuously trying to improve upon it. Listen to professors who bring data on the table, no sales pitch of AMC employees can match that. If you want to listen to war stories, listen to a soldier, and leaders of the time. Similarly, if you want to make it here, listen to the veterans who might differ in thinking but have made it.
The redemption through redemption–
Statistically, if you make a large number of decisions, some of them wouldn’t have your 100% conviction forever. Similarly, if you get irritated with some small thing, you sell a fund. That’s it, you have to file an ITR-2, you have awakened the inevitable. I think all stock market enthusiasts will cut down their enthusiasm once they face the wrath of ITR-2. It is not complex, or impossible, it just tests your patience. All your daily SIPs of 1000 INR will kill you by 1000 cuts when you open the Excel. Then there is 10%, 15%, 20% with indexation, slab etc.
Also, during the period during Oct 2021 to July 2022, all my greens were slowly and then rapidly turning to red. The scare of these 9 months froze me, but prompted me to read. Slowly, everyday I read some more, watched some more wise content coming out of trendy things and slowly I understood how common I am. Then I watched all the news channels videos of pre-covid era, some videos of Covid era and understood that all are wrong here and no one knows anything.
Although I can’t remember how, slowly I consolidated all MFs through the upcycle into only two schemes only through direct AMCs website, no SIPs, investing when I have money. I had to track a very complicated Excel sheet in one year, but it was worth it, it was worth every penny. I am aiming for fewer and fewer decisions in a year and hopefully improving on it. I understood the power is in t, not R. An average return over an unusual above average time will be sufficient for me.
What helped?
Early mistakes as a 32 year-old when life is not actually busy with human problems, gave me the time to think and reflect / learn. If these same mistakes happen to a 45-50 year old, it would be a tougher comeback. If this happens to a retiree who never handled a large amount of lump sum and wouldn’t earn again, it is irrecoverable.
The memoirs of my mistakes
Whenever I open CAMS, or MFCentral these zero balance folios never go away and they remind me. When I open an AMC site, the demat folios also pop-out showing historial 0 balance folios. These will never go away, I am an obsessive controller, I like a blank chalkboard, but I know these things can never be erased.
Learnings from me and my peers –
I like to think I am a smart man, professionally a scientist and I made all these mistakes. Without being arrogant, I fear most of us (maybe me too) are deemed to fail. I have felt it while talking to my juniors. No one is happy with a vanilla Aggressive Hybrid Fund, all want more returns. After 2 years of discussion, people are asking me the question of “Should I redeem when it comes down?”.
The question might be right or wrong, but the lack of conviction or interest to know on their own makes me hopeless for them. One of my colleague’s fathers is going to retire next year, and they had never invested in anything else but NSCs. I had shared some content related to lump sum handling on retirement to them. It has been a year, he didn’t yet find the time to click on the face of Mr. Dhirendra Kumar or Subramoney.
One of my seniors had asked me and I had started an SIP from his account for a housing goal which had accumulated some considerable value. His native friend told him to switch to an ELSS fund due to higher return and after switching he is unable to retrieve it now for buying his apartment. I explained the 3 years lock-in of ELSS and he was upset. He also didn’t know this transaction was taxable.
Most people who have an NPS account in our office, or relatives don’t know what they have, what they want or what is anything. They are all very successful in their career and have made it through the ladder, but have no idea of these things. The lack of interest in these things are prevalent and conviction is only relying on the surface level success of the last 4 years bull-run.
Sometimes I fear I am also deemed to fail, but I will work on improving myself.
If you think this was a good read, I want to disclose I am a majority direct stock investor (for now). That Pandora’s box we shall open another day! More action, more drama!
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
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.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 7000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 2,500 investors and advisors use this!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)