How do you invest your salary?
It's been close to a year since I am earning a salary and this is what I do: 1. Invest a little less than 30% straight into MFs. I have three ongoing SIPs- small cap, flexicap and a Large + Midcap fund. (Planning to increase the amount further into these and not start a new sip) 2. Max out 80C by putting the entire limit in PPF, this is on top of what is by default deposited into EPF. 3. A little (inconsistently) into direct stocks as and when I find or get to know about a decent trade opportunity. 4. An LIC ULIP plan that my father made me subscribe to 🙂 (hopefully will end in a couple more years) Tips from experienced folks will be much appreciated.😄
Yaar LIC ka batana. I'm being hoarded by someone I know for it. Reddit says it's a dog shit deal. But I'm still undecided.
Uzumaki
Stealth
a year ago
There policies are dog shit indeed on every. They charge fees at every level so from your sip amounts every month a little over 10% gets deducted just in fees as compared to < 1% in mfs.
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Following the 50-30-20 rule for 5 years now.
Started with a salary of 6LPA fixed. Now at 25LPA.
Investing 30% for retirement. 20% for big purchases and using 50% for daily expenses, whatever is remaining from the 50% gets reinvested in the 20% segment.
30% goes to a mutual fund SIP.
20% goes to a RD. RD duration 9 to 24 months. Depending on my wants.
Rebalancing both segments every time I get a raise in my salary.
This simple approach has been really helpful in creating a 12 months emergency fund and 20+ lacs in my retirement fund.
Uzumaki
Stealth
a year ago
Thanks for sharing!😄
I have term insurance of 3cr and health insurance of 5lacs. An insurance for my parents 20lacs. All this expense comes around to 14k per month, after which I do 50-30-20 split.
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GoodPillar
Stealth
a year ago
I do the same. Invest 50% in MF(Flexi cap and Index funds) and remaining in 80C instruments here and there.
Tip - Make sure you have a 6Month Emergency Fund, Health and Term Insurance before starting your investment journey.
Uzumaki
Stealth
a year ago
😂😂
Small cap, large cap, mid cap, flexi cap (combination of small, mid, large). You have entire stock universe caps covered. Before increasing SIP, may be step back and think your strategy and is there a reason why such asset allocation.
SSY is good if you have a girl child. It can be used for retirement. NPS is good too. You get 50k extra benefit under 80ccd 1b. Life and health insurance if you don't have. Better pay money and follow a good advisory model to invest in stocks directly instead of thinking you have the ability to pick right stocks on your own. All the best. My personal experience - 8 digit investments in MF and stocks.
Also an NISM certified and AMFI registered MF distributor, IRDAI licensed Insurance advisor. NPS advisor in ICICI PRU.
All the best.
Uzumaki
Stealth
a year ago
Hey @Sreekanth, So I started with just a small cap (Robeco) and a flexi cap (ppfas because it had some exposure to us equity and overall has a good history) After almost an year of only putting money in these and increasing the sip amounts I still had some more money that I wanted to add on to these funds only but based on some youtube research and a little bit of reading I decided to start an sip in a safer less volatile fund basically bluechips. That is why I subscribed to a large+midcap through a single fund (icici pru)
Uzumaki
Stealth
a year ago
It would be great if you could give some specific points in what you feel I am doing wrong. To me only having small caps felt a bit risky.
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Sugar
Stealth
a year ago
Real estate/Nifty bees
Real estate/Nifty bees
Real estate/Nifty bees
Real estate/Nifty bees
Real estate/Nifty bees
Real estate/Nifty bees
I repeat
Real estate/Nifty bees
Real estate/Nifty bees
Real estate/Nifty bees
Real estate/Nifty bees
Real estate/Nifty bees
Real estate/Nifty bees
Real estate/Nifty bees
Logic : Most funds don't beat Index, India is emerging economy with highest growth rate on such a large base, Industrialisation leads to appreciation of property(land land land land....I repeat land land land) price
Shawnmendes
Stealth
a year ago
Do you mean land land or real estate(flat/apartment etc) is also included
Try small and mid cap funds. Never buy large cap via MFs. You can easily figure out top 30 companies to invest in out of 100. Invest directly into those via SIPs.
Why would you pay MF houses 1% to invest in HDFC Bank, LT, Bajaj Finance, etc?
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Monthly SIP into Nifty, Midcap, Small cap and Gold ETFs
Some money into PPF to lock in some money.
A bit into GSecs as liquid money instead of FDs.
EPF maxes out 80C
Are you under old tax regime... I mean that will explain using 80c????
Uzumaki
Stealth
a year ago
Yes
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Everything goes into Direct stocks aside from ₹150k in PPF by 4th April. Also enrolled for corporate NPS and ₹50k in NPS lumpsum whenever the market has crashed heavily. Has worked out well.
Uzumaki
Stealth
a year ago
@wanderingindian How long have you been doing this?
Also how do you pick direct stocks? Do you get enough time to research the market, and how active are you in terms of trading/investing.
Thanks!
Since the past six years after I started working. My weekends and spare time are spent researching on the stocks. I take 80% exposure to small and midcaps since age is on my side currently. Will bring it down slowly steadily and divert more to Large caps post marriage and kids.
baffledwaffle
Stealth
a year ago
Stash cash into a separate bank account, meant for savings.
20% of my salary into an Index fund, PPFAS Flexi Cap and a Liquid Fund.
any suggestions for a separate bank account for savings? does it even matter or anything works? thanks!
baffledwaffle
Stealth
a year ago
@TechnicallyBehind I just had an SBI account in which salary used to get credited.
Took an HDFC bank account too for savings, and use the SBI for spending.
So I have one which is used for spending and the other as a savings account.
Apart from my monthly expenses I keep the rest in the other account. I invest some into mutual funds, but don’t put all the cash in MF/FDs.. and always have some liquid cash, since you don’t know when an emergency expense will pop up.
The reason why I did this is cause I spend too much on food, especially desserts. So when I started to keep separate accounts, I don’t have this thought that I have enough left, even if I splurge. It creates a false perception that I only have enough for this month.
And one more thing SBI bank servers are down frequently and sometimes becomes a problem for using UPI, HDFC is better.
To all the experienced folks please suggest sip to invest in.
I'm a beginner and only know about Parag parekh.
Also which app I can use to invest in sip?
corporateboyjoe
Stealth
a year ago
do you require a demat account to invest in sip on phonepe?
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FYI- And real estate is shit. You need to be very lucky to get a return over 10% (XIRR).
Strawhatluffy
Stealth
a year ago
Always build a 6month expenses worth reserve and store it in a bank. Take a good term insurance and health insurance (cover parents too if they don't have a health insurance). Ditto is a good service provider. You can contact them.
Diversify your investments into equity, MF, gold (SGB are best) and real estate (land in your hometown after you build a decent corpus). With your SIPs build a corpus and only then get into equity investments. A 5% profit on a 10L capital is 50K and that is a good amount for a side hustle.
Use any tools or use a standard expenses excel template and track your expenses. Understanding your expenses will give you lots of insights. Keep 10% of your salary in another account. Use that for your entertainment, trips, family outings etc. Make all spends using a CC. There are banks which provide lifetime free cards like IDFC first bank. When you pay the bill, pay it using that account. This would be an easy way to track.
I'm assuming the MF funds you have selected are direct ones. Keep track of markets. If there is a 10%+fall in the market, then add additional funds into the same funds. Will add more in further comments
1. Invest 40% into equity markets
2. Invest 10% into bond markets
3. 20% into my trading account
4. 30% into bank savings account ( ensure swipe in feature is enabled)
It’s been almost 8 years since I have been investing. Here is my breakup. I am able to save 80% of my income.
1. 1.5% goes for term insurance and health insurance. Both are different plans. Term insurance till age 60 with 2Cr coverage, and health insurance 5 lakhs with 40 lakhs top-up.
2. ELSS - 6% goes into ELSS funds which comes under 80C plus EPF.
3. NPS - 2% allows me to save under Section 80CCD(1B).
4. NPS - 10% of my basic per month allows me to save under Section 80CCD(2) - comes around 8% of my monthly investment bucket.
5. MFs - SmallCap, Index, LargeCap and Overseas FOFs - comes to around 50% of my monthly investment bucket.
6. P2P - 5% allocation
7. Crypto - 3% allocation
8. SGBs - This is not a monthly allocation but roundabout 10% overall.
9. Liquid Funds - This is for contingencies and to be utilised more for emergency purposes. -12.5%. I also use this amount for IPOs and value investing(stocks which gives dividend plus high growth stocks). I always do long term investment(min. 5 years).
There is additional ULIP investment which I have been doing since 2016, and comprises 1.5% from my expenditure bucket(20%). It’s with SBI and has given me XIRR of 10.5% till date. It went to around 12% sometime but again decreased because of market fluctuations. Initially, there were very high charges as someone already pointed out, but as the policy becomes older, the charges decrease. This is a 20 years plan(I still have 13 years left). Hopefully I get a decent 11~12% XIRR overall.
Overall, I am able to save 1.5 lakhs under 80C, 50k from 80CCD(1B), around 2 lakhs under 80CCD(2), 15k under 80D, and 2 lakhs under Section 24.
Total of 6.15 lakhs non taxable income.
I am glad that my ex-company introduced Section 80CCD(2), since this has to be initiated from company side.
Uzumaki
Stealth
a year ago
B2B SaaS
Bengaluru
SDE 1
Back-end
1yrs
Series D+
₹20L
Total
₹20L
Fixed
₹0L
Variable
₹0L
Stocks
Ps:
My current compensation and role.
Sharing this because a few people in comments were asking about it, also I just wanted to acknowledge the fact that I have been extremely lucky in terms of having no loans/ coming from a family background I don't have to send any money home or something like that. I am 23 single and I only have to pay for my own expenses.
Uzumaki
Stealth
a year ago
Is NPS really worth it? Considering the lock up period? It makes lesser sense to me individually I feel like I would rather put the extra 50k in mfs itself
Uzumaki
Stealth
a year ago
The lock up period as well as the 40% mandatory annuity
Congratulations! You've started and started bang on time. Most folks don't even understand this till its too late. Well done!
There is no one path to wealth - for your unique journey engage with a good Financial Planner.
Just keep investing - the easiest is 80% in a NIFTY50 ETF / MF + 20% in SGB every month + PPF. Don't need to look at multicap at this time - you don't need it.
Accumulate till you hit a 50L corpus and then fine grain & optimise and look at other asset classes (mid / small caps / Smallcases / etc).
We usually confuse prioritization in financial planning. The way to look at where to 'invest' for continued results:
Priority 0 - Self - Upskilling, Workout.
Priority 1 - Risk Cover - Life & Health Insurance.
Priority 2 - Growth - Equities & Mutual Funds.
Priority 3 - Hedge - Debt, Gold.
Priority 4 - Stay - Real Estate.
Good luck!
Uzumaki
Stealth
a year ago
Thanks! 😄
1. 20% of take home in MFs
2. 20% of take home in direct equity
3. 1.5 L in PPF every year before April 5th
4. 50k in NPS every year
5. 70k in 3 LIC endowment policies (can’t help it, in too deep)
6. Adhoc investments in SGBs
7. Some amount in FDs
Rest go in living expenses. Also have to pay large tax amount for exercising esops.
Planning to invest in some real estate projects as well.
Uzumaki
Stealth
a year ago
How long have been following this? And thanks for sharing😄
I believe you are doing great, but be consistent. (Consistency is the key for building wealth) based on your research keep changing the weights in MF’s, direct equity or fixed return instruments
Study the real estate in tier 3/4 cities and invest there. I believe real estate will give more returns in India for next 10 years than equity.
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