Last Updated on November 22, 2021 at 8:23 am
Aditya Tejas writes, “Thank you for all your work; I appreciate the time and effort you put into creating relevant, insightful and thought-provoking content. I’ve already gone through your flagship course. It helped me (re)think about my asset allocation, and I’m grateful for your insights”.
“Also, I’ve taken notes on your views about “index investing” as well as “low volatility + momentum stocks”. Both these ideas appeal to me. For a newbie like me, who wants to keep it simple and can invest more than 50k a month, is it possible to recommend one investment strategy over another? Why?”
“Or am I looking at this incorrectly? Is it better to do both instead of one? Or maybe invest 90% in the index and 10% in low volatility stocks (or vice-versa)? If you believe this is a valid question, please consider writing about this. Thank you”.
Aditya is a content marketer & strategist, so it would be reasonable to assume he does not have EPF or employer-based NPS. Since his income is likely to fluctuate, we recommend that he first focus on building a robust emergency fund. He can consider investing Rs. 5000 to Rs. 10,000 a month in a liquid fund (with a reasonable stash in a simple bank account) until he has at least a years income kept aside. A robust health insurance and term insurance (if there are dependents) is also mandatory before investing can start.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! 🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
With that in place, he needs two funds in his long term portfolio (meant for financial independence): A Sensex or Nifty index fund (50-60%) and a gilt fund (50-40%). Recommendations are available here: Handpicked List of Mutual Funds Oct-Dec 2021 (PlumbLine).
That is it! Aditya or any other young earner like him needs to do nothing else. For some inspiration, see How Avadhoot Joshi evaluates his investment portfolio.
To answer Aditya’s specific questions, low volatility investing is indeed a hassle-free way to pick stocks, but it still requires maintenance. I would not recommend it at this stage in life, especially for an entrepreneur whose time is limited plus deadline pressures. That time is better spent on leisure, planning their future, automation, business etc.
In principle, one can “invest 90% in the index and 10% in low volatility stocks” and call it the core and satellite portfolios. Many people tend to justify trading or crypto or anything fanciful this way. The catch is that the satellite sometimes takes the “core” of their free time and is not worth it.
We firmly believe that our free time should be spent doing nothing; creative pursuits, upskilling etc. That is any activity that would make us healthier and possibly result in a higher income. This has much better odds of making us wealthier over time than any other “small exposures”.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => 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 over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
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)