Why I increased equity MF investments by 275% and reduced PPF contributions

Published: November 20, 2021 at 7:00 am

In Jan 2021, Gowtham Subramanian discussed how he had started goal-based investing, focusing on asset allocation and how it has made him feel more in control over his finances. In this follow-up audit, he explains why he had to make bold and tough choices, like increasing equity mutual fund investments by 275% and reducing PPF contributions.

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 be empathetic to diverse views. Articles are typically not checked for grammar unless necessary to convey the right meaning to 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 their investing journey (this edition is a good example. Also see, for example, audits by Suhas and Avadhoot linked below). Now over to Gowtham.

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Thanks for providing the opportunity again to publish my financial audit on your site. This platform has forced me to revisit my goals every year to avoid deviating from where I started.

Last year during my financial audit, I had set some resolutions for 2021. I want to share the update on them and provide lessons learnt from last year’s finance journey.


  • Life Insurance – HDFC Life Click 2 Protect 3D Plus (Insured Amount: 1.5 Crores)
  • Health Insurance – Group Insurance policy with a base cover of 3 Lakhs and Top-up for 6L

Retirement Portfolio

  • Debt Instruments – EPF and PPF
  • Equity – PPFAS FCF

The first resolution is to improve the asset allocation of my retirement portfolio. Since I started goal-based investing late, my retirement portfolio is debt-heavy, and last year my asset allocation was 30 (Equity): 70 (Debt). This year, I improved the asset allocation to 35 (Equity): 65 (Debt).

Adjusting the asset allocation for this portfolio was not easy. Since rebalancing is not possible, the only option was to trim down investment into PPF and redirect the same into PPFAS FCF. To achieve this asset allocation, I had to grow my equity investments by 275% compared to last year.

It is still a long journey ahead to achieve the target allocation of 60 (Equity): 40 (Debt). Since the portfolio is still debt-heavy, rebalancing is out of scope; hence I didn’t add any debt funds.

I tried to retain the portfolio constant from last year without cluttering it. When the returns from the portfolio are compared to the retirement corpus needed for this year, there was a 25% shortfall.

This shortfall could be attributed to the increased household expenses. However, steps must be taken next year to mitigate this or else my portfolio slippage will increase.

Child Education Portfolio

  • Debt Instruments – None
  • Equity – UTI N50 and NN50

The second resolution was to add Nifty Next 50 to the portfolio in the ratio of 70 (N50): 30 (NN50). I wanted to add NN50 just to offset the concentration risk due to the market capitalization of N50.

Currently, the asset allocation is at 65 (N50): 35 (NN50). Since I will be increasing my investments next year, I plan not to rebalance this year since the difference is quite low. I have planned to add PPF for the debt component next year. The current corpus in this portfolio has grown by 12x compared to the last year.

However, compared with the target corpus required, I managed to achieve only 0.5% of my goal. The investment into this portfolio must be increased many folds to stay on track. Currently, most of the funds are redirected to my emergency fund portfolio. Therefore sizable investments couldn’t be made.

Emergency Fund Portfolio

  • Debt Instruments – PPFAS Liquid Fund

The third resolution was to switch from ICICI Flexible RD into a liquid fund. Previously I thought of investing in the ABSL Liquid Fund, but due to the ease of managing the portfolio, I switched to PPFAS Liquid Fund. Currently, I have achieved 32% of my target corpus, which roughly translates to 3 months of household expenses. The returns are pretty decent at an XIRR of 3.24%. Once the goal is complete, the investments into this portfolio will be diverted to the Child Education Portfolio.

Vacation/Hobby Portfolio

The final resolution was to accumulate cash for a vacation. But due to unforeseen circumstances, we couldn’t achieve this goal. However, I have started investing the amount I had for this goal into my crypto portfolio.

Since this is the dispensable cash I had, the volatility of the crypto market doesn’t affect me much. My crypto portfolio currently holds 4% of my entire investment. I try to avert the FOMO tendency to the max, and I don’t invest systematically. Currently, I am just gambling with this portfolio since I haven’t tied it to any goals.

Upcoming plans for this portfolio: Though this portfolio could have delivered the maximum returns out of all my other portfolios, this is the most volatile portfolio whose return changes drastically. De-risking strategies are essential if I plan to keep accumulating corpus. Else, it’s a wasted opportunity. The widely known de-risking strategy is to rebalance the gains between crypto and equity. However, taxation and conversion charges eat away most of the returns. Therefore the rebalancing should be done cautiously and less frequent as possible.


I currently have one car loan for which I have completed EMI payment for two years. I made this financial decision before I took up goal-based investing, and it’s been tough to manage this liability alongside other investments and expenses.

I have five more years left to close this loan, and I have no plans to foreclose it as it is not as rewarding as investing. On doing a net worth analysis, I could see my networth is still negative due to this loan, and I may need another year to make it positive.

Resolutions for 2022

1. Keep accumulating corpus. Keep the portfolios constant unless there is a change in the fundamentals behind the instruments.

2. Planning to manage the wealth of my parents as well through a fee-only Financial Advisor. (We have a plan to purchase a house in the city and in our hometown, for which we need to decide how to use the corpus in hand.)

3. Bridge the shortfalls of the retirement portfolio.

4. Keep away FOMO. This would be the hardest goal!

Reader stories published earlier

As regular readers may know, we publish a personal financial audit each December – this is the 2020 edition: How my retirement portfolio performed in 2020. 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. They could be published anonymously if you so desire.

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Pattabiraman editor freefincalDr 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.
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