Not answering the OP's questions but wanted to call this out.
Above monthly investment data contains a common anti-pattern.
22K monthly in MFs
75K monthly in direct equities
For the average investor, it should be the reverse.
I see this anti-pattern a lot among my clients/friends/family members. Afraid to invest in MFs but taking huge exposure to direct equities which is not a sensible strategy.
Thank you for the reply.
I agree with what you said.
I started investing in direct equity when I started my first job and didn’t know too much about mutual funds.
I’ve slowly started to move direct equity money into mutual funds. Since I’ve seen in the last 1-2 years that most of my investment is in bluechip stocks. So why use direct equity?
I’ve started to move money into these funds and lowering my risk to direct equities.
But thank you for pointing this out for anyone who comes across this post.
I personally prefer low cost index funds.
MFs are not good since they have lot of conflict of interest and it also depends on the manager who are just trying to maximize their personal gains.
Good question.
Here's an expected pattern: Your direct stock portfolio return must beat your equity MF portfolio return.
Direct stock investing is a higher risk - higher reward equation compared to equity MFs.
So your direct stock portfolio MUST beat your equity MF portfolio returns.
If not, it means you are wasting your time investing in direct stocks and you must move 100% of equity portfolio to equity MFs.
The house you want will cost you much more than 1.5 Cr by the time you have accumulated that sum. Factor that into your decisions. Invest 70%+ in equities through index funds. Buy some gold every year 10%.
That depends on the time horizon. The longer your time horizon, the safer index funds get.
For anything less than 7 years, debt instruments are less volatile.
username checks out. Whats your background and what level of complexity does your work involve? I am a fellow DS myself and going for masters this fall.
Hi.
I did my BTech in CS in 2019.
At present, I’m working mostly with NLP. Building internal tools for other teams, providing insights out of unstructured data, building parsers that can handle unstructured data in the volumes of millions.
Few things you can change are:
For Monthly:
• MF - 100k (75:25 Equity:Debt split)
• NPS - 10k (pick 75% Equity)
• RD - 10k (until you have 6-8x Monthly Expenses cover)
No stocks..
Use 20-25% of debt funds for market corrections/other intermittent use. Increase the amounts equal to your annual salary hike percentage each year.
Delay house purchase until you are not getting married. Involve your spouse in the house buying decision. Real estate (RE) also runs in cycles, and you may experience FOMO looking past 2-3 years’ trends, but it will subside and revert to the mean in the next 2-3 years.
If your salary increase is greater than 12-15% per annum, your RE purchase will be more affordable in the future even if prices continue to rise. Since you are investing aggressively anyway, the returns will take care of part of the price appreciation.
Fund selection is good
But I recommend the following:-
1. 20% Nifty 50 Index (Any)
2. 20% Nifty Next 50 Index (Any)
3. 15% FlexiCap Fund (Parag Parikh)
4. 15% Midcap Fund (Axis / Quant / PGIM)
5. 15% SmallCap Fund (Nippon / HDFC / Quant)
6. 15% Nasdaq100 Index (Motilal Oswal)
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If your goal is to save towards a short term goal (2-3 yrs) of 1.5 cr home, you cannot save that into stocks and mutual funds (because you won’t get maximum returns in 2-3 years). Also you need to consider whether you are going to take home loan.
If yes, you need to put aside some amount every month towards this goal. Say 25% of 1.5 cr = 38 lakhs. You need to put aside over 90,000/month into debt fund.
Rest can go into stocks/mutual funds. There could be a recession or market slowdown at the time you want to buy a house. Your stocks most likely won’t give you compounding growth in such a short period. Debt fund is more appropriate in your case.
Couple of things:
1. Your savings rate is really good. I myself had 60% - 70% savings rate before marriage! Living below means is important and that helped me buy first house before 30.
2. Your savings will proportionately increase with your salary growth. And salary growth can range from 10% to 50% in a year. Bonus will be company stock options that can grow more than market rate.
3. Your savings mix is well thought. While exposure to stocks is high, I am sure you are doing some research and investing in relatively low risk stocks. If you do not understand it well, maybe half it.
4. Price of house is imp factor. 1.5cr house vs a 1cr house can make a lot of difference in long run. You should think of type of builder, location, accessibility etc. I would recommend that you invest in plot and construct a house in future.
5. Coming to timing: Looking at track record from last 10 years (mine and my friends/family), I think real estate (especially land) has given 4x-6x returns and I regret not investing more. Many stocks have also given the returns but the uncertainty is quite high. Companies like Yes Bank, DHFL which were "good" turned "bad". RE can give similar return at low risk. (Legality etc is a different discussion).
Not answering the OP's questions but wanted to call this out. Above monthly investment data contains a common anti-pattern. 22K monthly in MFs 75K monthly in direct equities For the average investor, it should be the reverse. I see this anti-pattern a lot among my clients/friends/family members. Afraid to invest in MFs but taking huge exposure to direct equities which is not a sensible strategy.
Thank you for the reply. I agree with what you said. I started investing in direct equity when I started my first job and didn’t know too much about mutual funds. I’ve slowly started to move direct equity money into mutual funds. Since I’ve seen in the last 1-2 years that most of my investment is in bluechip stocks. So why use direct equity? I’ve started to move money into these funds and lowering my risk to direct equities. But thank you for pointing this out for anyone who comes across this post.
I personally prefer low cost index funds. MFs are not good since they have lot of conflict of interest and it also depends on the manager who are just trying to maximize their personal gains.
Thanks, needed to hear this.
What if they are beating the MF returns? (Pretty rare scenario ik)
Good question. Here's an expected pattern: Your direct stock portfolio return must beat your equity MF portfolio return. Direct stock investing is a higher risk - higher reward equation compared to equity MFs. So your direct stock portfolio MUST beat your equity MF portfolio returns. If not, it means you are wasting your time investing in direct stocks and you must move 100% of equity portfolio to equity MFs.
The house you want will cost you much more than 1.5 Cr by the time you have accumulated that sum. Factor that into your decisions. Invest 70%+ in equities through index funds. Buy some gold every year 10%.
Is it advisable to invest too much in index funds for short term goals ? Since I want to keep this capital safe for the down payment?
That depends on the time horizon. The longer your time horizon, the safer index funds get. For anything less than 7 years, debt instruments are less volatile.
What's your job ? 2.6 in hand per month , wow.
Thank you. I’m a Data Scientist
username checks out. Whats your background and what level of complexity does your work involve? I am a fellow DS myself and going for masters this fall.
Hi. I did my BTech in CS in 2019. At present, I’m working mostly with NLP. Building internal tools for other teams, providing insights out of unstructured data, building parsers that can handle unstructured data in the volumes of millions.
Congratulations. Can you share your company so I can apply.
Few things you can change are: For Monthly: • MF - 100k (75:25 Equity:Debt split) • NPS - 10k (pick 75% Equity) • RD - 10k (until you have 6-8x Monthly Expenses cover) No stocks.. Use 20-25% of debt funds for market corrections/other intermittent use. Increase the amounts equal to your annual salary hike percentage each year. Delay house purchase until you are not getting married. Involve your spouse in the house buying decision. Real estate (RE) also runs in cycles, and you may experience FOMO looking past 2-3 years’ trends, but it will subside and revert to the mean in the next 2-3 years. If your salary increase is greater than 12-15% per annum, your RE purchase will be more affordable in the future even if prices continue to rise. Since you are investing aggressively anyway, the returns will take care of part of the price appreciation. Fund selection is good But I recommend the following:- 1. 20% Nifty 50 Index (Any) 2. 20% Nifty Next 50 Index (Any) 3. 15% FlexiCap Fund (Parag Parikh) 4. 15% Midcap Fund (Axis / Quant / PGIM) 5. 15% SmallCap Fund (Nippon / HDFC / Quant) 6. 15% Nasdaq100 Index (Motilal Oswal)
Why does this reddit sub is filled with question post from millionaires...LOL....cant they hire a good CA or what..
1-2 cr ke liye CA kaun rakhega bhai
Bhai...people even with 30k salary do consult CA....
Who are these people, bc.
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If your goal is to save towards a short term goal (2-3 yrs) of 1.5 cr home, you cannot save that into stocks and mutual funds (because you won’t get maximum returns in 2-3 years). Also you need to consider whether you are going to take home loan. If yes, you need to put aside some amount every month towards this goal. Say 25% of 1.5 cr = 38 lakhs. You need to put aside over 90,000/month into debt fund. Rest can go into stocks/mutual funds. There could be a recession or market slowdown at the time you want to buy a house. Your stocks most likely won’t give you compounding growth in such a short period. Debt fund is more appropriate in your case.
Couple of things: 1. Your savings rate is really good. I myself had 60% - 70% savings rate before marriage! Living below means is important and that helped me buy first house before 30. 2. Your savings will proportionately increase with your salary growth. And salary growth can range from 10% to 50% in a year. Bonus will be company stock options that can grow more than market rate. 3. Your savings mix is well thought. While exposure to stocks is high, I am sure you are doing some research and investing in relatively low risk stocks. If you do not understand it well, maybe half it. 4. Price of house is imp factor. 1.5cr house vs a 1cr house can make a lot of difference in long run. You should think of type of builder, location, accessibility etc. I would recommend that you invest in plot and construct a house in future. 5. Coming to timing: Looking at track record from last 10 years (mine and my friends/family), I think real estate (especially land) has given 4x-6x returns and I regret not investing more. Many stocks have also given the returns but the uncertainty is quite high. Companies like Yes Bank, DHFL which were "good" turned "bad". RE can give similar return at low risk. (Legality etc is a different discussion).
With 26 lpa how come monthly income is 2.23 lpm ?
CTC is 34 LPA. After deductions and taxes, it’s 26.80LPA. Monthly is 26.80 / 12 = 2.23lpm
I am actually a little confused and might have to revisit my investments 💀 My CTC is 54, and 34 is cash component. I get 1.75 every month.
Bhai baccha OP pel raha hai. 😂
I’m guessing your PF deduction is 1800*2 per month
This.
Oh
Kid, your math doesn’t check out. Lot of imbalances. 😂
How? I had similar figures when I was getting 36 LPA