This is an update on my mutual fund investing journey, which began on 19th June 2008. In the last three decades, I have gone from being a spend-thrift to being in debt to financial independence.
New community members can refer to these articles for an account. The Financial Arrow of Time and My Journey: Driven by the fear of making the same mistakes again. My story was featured in Livemint.
I wish to clarify that this is only a personal milestone, not some earth-shattering event. I know many investors who have invested for decades in the capital market. Many of them are too reticent to discuss their journey.
There is so much to learn. Be it the stock market or life, the moment you sound like you have some experience, you will get kicked to the ground. The simple truth is that life selected one for me out of a million ways to go from point A to point B in ten years. This does not mean this is the only way to success (or failure).
Details of how I started investing and some insights on the portfolio growth can be found in last year’s account: Fourteen Years of Mutual Fund Investing: My Journey and Lessons Learned.
Here, I would like to provide a quick portfolio update and re-visit the lessons (most of these, unsurprisingly, are the same as before).
Retirement Portfolio Update
This is the growth of my retirement portfolio compared with identical purchases and redemptions in the NIfty 50 TRI index as of 4th Sep 2023, created using the freefincal Mutual Funds and Stock Portfolio Tracker on Google Sheets.
Asset Allocation (approximately)
- Equity 63% (MFs: 85.8%, Stocks: 14.17%).
- Debt 35%
- Cash 2%
The stock portfolio performance is published each month. The current XIRR is 11%. These are the equity funds. The number in brackets is the weight, and the next number is the XIRR. The overall XIRR is 15.83%
- Parag Parikh FlexiCap (55.79%) 19.39%
- HDFC Hybrid Balanced (23.03%) 14.70%
- QLTE (14.21%) 12.19%
- UTI Low Volatility (6.96%) 18.23%
The debt portfolio
- NPS(Mandatory (65.36%) 8.93%
- ICICI Gilt Fund (19.28%) 5.89%
- PPF 14.99%
- Parag Parikh Conservative Hybrid Fund (0.37%) 9.57%
Also see 13 years of investing in the NPS.
Lessons learnt
These are reproduced from last year’s account. If I can call myself successful, it is only because of three aspects
- Luck
- Discipline
- prioritized emotions. I was more emotional about the lack of financial independence after retirement than seeing my portfolio in “red”. Therefore, I did not monitor my portfolio daily. I did not seek information every day and worry about it. I let my money grow peacefully with occasional gardening.
My portfolio growth has nothing to do with my ability to choose “good funds” or my education or training. By nature, I am disciplined and hate information.
If I had to list my lessons (even if no one is asking me to!), they would be:
1: Get a life! Identify your goals, invest in them and leave them alone until it is time for your annual review.
2: Get rid of Financial contacts or groups on WhatsApp, Twitter and Facebook. An investor is defined by her ability to process information – and the best way to do that is to avoid information. Just as the best way to manage time is to avoid work (or learn to say ‘no’).
3: Invest like your rear end is on fire, or life will light it up later.
4: If your needs are far away and you see a sideways market, pump in money if possible. That is the best time to invest.
5: Never forget that these gains are notional. A single event can decrease your holdings by half. Mountaineers believe they can climb a peak “if the mountain lets them”. Markets are not different. Remember, notional losses are real losses. Only notional gains are notional. A goal-based systematic risk management strategy is essential.
6: Your attitude towards money itself and profit and loss depends on how much money you have. I have seen my portfolio gain or lose 10s of Rs, 100s –> 1000s —> ….. Along the way, I realised that to be successful, we need to learn to lose/gain lakhs every day and yearn for it.
7: Money is a drug. The more you have, the more you want to have. So, at some stage, you will have to draw the line. Increasing the amount you give away to help others at the same rate at which your portfolio grows will keep us grounded.
8: To be rich, we must first think like a rich person. Have a 10Y, 25Y or 35Y year view of your life. Want To Get Rich? Write Yourself A One Crore Cheque!
9: We cannot buy stuff with returns. Having enough money is more important than getting high returns; they are not the same. The 2016 Personal Finance Audit: Returns do not matter!
10: Concentrate on the portfolio return the most. Individual funds will have up and down ride. It is fine if the portfolio moves along at a healthy pace. This is the main reason for developing the freefincal mutual fund and financial goal tracker. This is the only sheet I use to track my goals and investments.
11: To make money, two things are necessary: money and time. Returns are not in our control. Those who want to become financially free must invest as if their lives depend on it. For all others, try to invest for retirement at least as much as you spend or as close to it as possible. So ask yourself: What is your investing growth rate (CAGR)?
12: Get a proper hobby so that you forget about money. Freefincal is, unfortunately, my hobby. Just because I write about investing does not mean I look at my portfolio daily and tinker with it. Every statue was once a rock. It will become a rock again if we do not know when to stop sculpting.
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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 or 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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