You can also explore the full reader story archive. Do contact us, if you have a story or know of a friend’s account that the DIY community would benefit from. Editor’s note: To preserve the emotions of the author’s journey and their thinking process, reader stories are published in an as-received format including the references to freefincal – which we are grateful for and unfortunately cannot be edited out without modifying the spirit of the article.
My name is Virendra. I am 30 years old, married with a working spouse. One day while watching YouTube videos about finance, I got a recommendation about freefincal and since then, not a day has gone by where I have not watched/read freefincal videos and articles.
I had assumed that index funds are the way to go with getting on average 15% returns at low cost. (how silly that sounds). Reading your articles, watching your videos gave me a good idea where I stand. I was nobody. Had no idea about financial goals and how to plan them. How to reduce risk (why it’s important) I was mesmerised by content you had posted. Lessons learnt were, 1. higher risk doesn’t mean higher returns and
That is when I started becoming serious about goals. I have a habit of writing down my expenses to every penny I spend since last September. I was actually very proud of that habit but when I read your article that tracking expenses are of no use, instead, track investments I again felt lost. Tracking expenses at least helped me to see how much I spend and where. Miscellaneous was always the column with the highest spend.
I put these numbers in the freefincal DIY retirement calculator and was shell shocked to see the final amount needed at age 55, which was more than 5crs. I couldn’t believe it and did that calculation, again and again, to see the amount increase by little but never came down. That is when I realised the importance of financial planning.
Freefincal made me understand financial literacy is very important, and that is when I started planning for retirement and future need of my children. Considering my retirement at age 55, I understood I have time on my side and can plan accordingly. We got married a year and a half ago and have no children as of yet. But as per your advice, I have made two portfolios one for retirement and one for future needs of my child/children.
I got how much I need to invest every month from your calculator. I have decided to have one aggressive hybrid fund, one nifty index fund and one nifty next 50 index fund as my equity portion of the portfolio is 40-40-20% for both my goals. I know there would be overlap between a large cap index fund and aggressive hybrid fund, but I am ok with it till 45% for the downside protection it would provide to the core of my portfolio. For the debt part, I am using ten years constant maturity gilts for my retirement.
Till now, my portfolio is debt-heavy with only PPF, which I will use for my children need as debt component. It will be very hard to make this allocation even close to 60-40 because of considerable amount, but I will try to do it as quickly as possible.
I chose all my funds by doing inky pinky without considering star ratings. (I am a good student I guess).
I have made an excel sheet to track investments from this year till 2045,
the year when I will turn 55. I am going to try and increase my investment by 5% every year. I am going to start with 70% equity and 30% debt allocation for both my goals. Every five years, I will decrease equity allocation to make sure that as I near my goals, I do not hold high equity portions. I have assumed returns of 10% from equity and 8 % from debt (very high) for the sake of calculations in the hope that at the end I will have enough corpus for my needs. I did this with my wife by my side, and she also understands how to invest. I kept the retirement portfolio under my name and children portfolio under her name to make her equal partner in everything we do. I am not doing SIP on my name, but I have a SIP on her name just to make her less burdened to manually invest every month.
We have considerable health insurance from our employer 12 Lacs to be precise, and I have got a term life insurance of 2cr. I also have direct equity which I am building for growth and gives me good liquidity.
Before doing this planning, I have kept aside emergency fund and have a small SIP with an arbitrage fund apart from above-mentioned funds in the same. My goal is to make sure in the coming ten years, I am worth half of my term insurance value and should not need an emergency fund after that.
Right now, we live in a rented house, but we will plan to buy a house soon. Both my parents are government servants who will have considerable pensions after their retirement; hence they won’t be financially dependent on me. (Rather will be moral support for me). They will live with me after their retirement.
I am not sure if I am suitable for passive investment, but I am willing to find it out.
I hope to control my emotions rather than emotions controlling me. I hope to be rich one day with a bit of luck.
Please join me in thanking Virendra for sharing his journey and in wishing him the very best in future.
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