The Year Expenses Jumped and Net Worth Grew 33%

Published on / By M. Pattabiraman Twitter: @pattufreefincal

Published: May 16, 2026 at 6:00 am

In this edition of the reader story, Sahil presents his fourth financial audit.

About this series: I am grateful to readers for sharing intimate details about their financial lives, which benefits us all. Some of the previous editions are linked at the bottom of this article. You can also access the full reader story archive.

Opinions expressed in reader stories do not necessarily 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 it is 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. You can publish them anonymously if you wish.

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.

This is the fourth in the series of my finance audits. The focus is on how I track my personal finance metrics and how DIY investors may use them. Pls go through the last three audits (FY23, FY24 and FY25) to get a better idea of definitions. This time, I am going directly with the numbers and fewer explanations.

How much do you earn, spend and invest? 

  1. The black line is the rolling 12-month income growth rate. In the last year, income has continued to increase, albeit at a slower pace compared to previous years
  2. I have been able to save/invest a lower % of income as compared to last year (blue line), and the remaining (yellow line) is expenses as % of income, which increased due to personal family celebrations. No EMIs (red).
  3. The graph is dated and will continue to be to ensure privacy
  4. Expenses were 62% higher than in FY25. It was a one-off, and I hope the expenses will be settled this year
Sahil's rolling 12-month income growth rate (black line). Percent of income invested (blue line) and expenses as % of income (yellow line)
Sahil’s rolling 12-month income growth rate (black line). Per cent of income invested (blue line) and expenses as % of income (yellow line)

Asset Allocation and Which asset to choose?

  1. Unified portfolio and no separate emergency fund 
  2. I invested 60% of incremental savings in equity. If you exclude the PF contribution, this would be 65-70%. But equity% still increased by only 200 bps. My target is 50%. Hope to touch in FY27
  3. Just the month of Mar ’26 reduced the MF equity XIRR from ~17% to ~13%; one bad month can kill equity returns. Although in Apr’26, XIRR is back to ~17%
  4. Asset Allocation starting, ending and investment during the year is in the table below:
 FY25 end asset allocationFY26 savings shareFY26 end asset allocationXIRR as of 31st Mar 2026
Savings+ FD7%1%5%5-6%
Debt MFs15%16%15%6-7%
Debt (PPF+ EPF+ NPS-C/G)22%14%19%7-8%
Equity (MF+ Stocks +NPS-E)45%60%47%~13%
Gold (ETF +SGB)6%4%8%~35%
REITs6%5%6%~13%
Total100% 100%

Instruments to choose and their performance in FY26

  1. Debt MFs are primarily used to cover emergency costs, to purchase equity during down months such as Mar’26 and to maintain asset allocation. A mix of arbitrage, liquid and some GILTs
  2. Debt illiquid, i.e. EPF, PPF, NPS, should continue to go down to 15% from 19% currently. It was ~40% in FY20. These are the pillars on which the portfolio is made, but pillars shouldn’t occupy a lot of space, else aesthetics and performance go for a toss
  3. Gold has delivered an amazing return in FY26, i.e., 48% (time-weighted return). I wish I had more gold, but now it has run out too much
  • REITs also did well in FY26, i.e., 20% (time-weighted return). Given the increasing interest rate environment, I feel FY27 will be okay for them, but I will maintain it to be around 6-8%
  • Money saved: No FNO, No trading, No LIC endowment/ULIP plan
  • The equity portfolio is mainly driven by 
    • Instruments- MFs: 86%, Indian stocks: 11% and NPS-E: 3%
    • Geography diversification: India: 81%; China: 11%; US: 8% (via MFs) 
  • Cap diversification: ~10% small cap, ~20% mid cap and the remaining large cap. All foreign equity is counted as large cap
  • MFs- PPFAS Flexi cap, Motilal S&P 500, SBI small cap, Invesco mid cap, Edelweiss Balanced advantage and Axis China (added in FY25). Though I also have some N50 and NN50, I use them only for lump sums, such as in Mar’26. No new Indian fund has been added in the last 48 months. While Indian MF returns were around zero in FY26, US MF gave 26% and China MF 34%, helping in outperforming N50TRI
  • Stocks: 16 stocks compared to 12 last time. Stocks had a mix of Nifty stocks and new-age companies. FY26 return was minus (6%), so bad year for direct stocks. But Apr’26 has given me 14% return in 22 days, so next year should be good
  • More on Equity MF performance as that is the more consequential part of the portfolio. I have beaten N50 TRI and NN50 TRI handsomely by 7-9% in FY26, way better than last few years. Part of this attribution goes to diversification, due to 20% US and China exposure, and to good returns from selected MFs (Invesco mid-cap and Edelweiss balanced advantage). 
  • Just for clarity and explanation on how to read the table below: My Equity MF portfolio Mar’26 last 12-month return (Apr’25-Mar’26)  was +5.8% against -3.0% return for Nifty50 TRI
Sahil's MF portfolio returns vs benchmarks
Sahil’s MF portfolio returns vs benchmarks

Here’s the rolling 12-month standard deviation of my equity MF over several months, compared with N50 TRI and NN50 TRI.

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Sahil's rolling 12-month standard deviation of MF portfolio vs benchmarks
Sahil’s rolling 12-month standard deviation of MF portfolio vs benchmarks

I have been able to beat the indices on both returns and volatility in FY26, the third consecutive year. This is the holy grail: lower volatility than Nifty while delivering higher returns. I am super happy with this result. Pls note the idea is to get lower volatility and not higher return %. 

Net-worth (NW) and its measurement

Networth insights to bring the above all together

  1. In FY26, my net worth increased by ~33% (down from ~40% last year). ~70% of the NW growth is driven by salary savings and ~30% from asset returns (capital gains and interest). Over the next two years, I expect the contribution from asset returns to move closer to ~40%, although this remains contingent on equity performance. 
 Savings contributionAsset returns contribution 
FY2391%9%
FY2464%36%
FY2572%28%
FY2670%30%
  1. Overall, till date, ~75% of my net worth is from human capital (savings contribution) and rest ~25% if from financial/asset returns. The latter number was <10% 4 years before
  2. I still don’t own a house. These numbers will dramatically change once home EMI starts
  3. I’ve crossed 10+ times (don’t want to share the exact number) of my annual expenses toward FIRE goals. I want to reach 40x by 2035

Reader stories published earlier:

As regular readers may know, we publish a personal financial audit each December – this is the 2024 edition: Portfolio Audit 2024: 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. You can also publish them anonymously.