What am I doing wrong?

[joyinhispresence]

@duffy44 I will be honest with you I am no expert or SEBI registered, whatever it's called. I am 24 and quite younger than you so everything I say might not absolutely be right for you. All that i write is purely what I have read or think is right.

Usually, a mutual fund portfolio should consist of 3 funds , 1 index, 1 risky, and 1 elss. Anything more will increase the amount of overlapping of funds. This will only result in further expenses while selling. If you are young (27 is young), more percentage would be given to the risky and elss fund. This is the time to grow wealth. The moment you cross 40/50, whenever you believe you have earned enough, you allocate massively to index for wealth preservation.This was the norm as per my family and whatever friends that I have.

As an example, my mutual fund portfolio includes
1. Quant tax saver
2. Hdfc nifty 50
3. Icici prudential smallcap fund(not index)

To this, you can add one sectoral fund now as per your own preference. In my opinion, there are 5 major sectors in india, auto, pharma, banks, fmcg, and IT. Of these, only IT, banks, and fmcg have created exceptional value compared to the rest (based on the respective index). Choose any one of the 3 sectors for your sectoral fund (i prefer IT as it is a disruptive and growing sector, to not influence i have not mentioned the name of sectoral fund but it is on IT index).

If at any point you believe you have the funds to diversify further, invest in other economies. Using etf mutual funds that's going to be your own thing. This is because INDIA is a net importing country. Until the oil issue gets resolved or our net trade becomes 0, rupee will lose value. I hold other currencies to counter that. This is entirely upon how much you can risk.

I hope I was able to help.

 

[duffy44]

@joyinhispresence My dude. Thank you for this. Loved the clarity. Will work on this and see what suits me best. I don't see age, my man.

 

[sdp15]

@duffy44 You are not doing anything wrong. Put 10k in quant flexi cap. Trust me, for 3 yrs, you will invest around 3.6L. one fund is enough.
Try to increase savings to one more FD of 4L. For studying, break the 2Fds and take loan for remaining. Don't break the MF. Just pause the payments once you go for US. Assume you stay in US for 5 years you will break even and save around 60-70L in a decent job. If you are in the tech, salary will be higherand so will be savings. Then if you chose to come back to India, I feel you can fire by 50.

Why the second FD?
At a 3 year horizon, MFs might not give great returns. Best bets are FDs or index at the moment. We can see nifty to be 28000 in next 4 years. And you will need disposable money for your travel needs. So, good to have it handy if you anyway go for loans.

 

[duffy44]

@sdp15 More 4L in FD? Aren't FDs insured till 5L only? Did not understand the "if you are in the h" part?

 

[sdp15]

@duffy44 Edited and updated.

 

[dreambernie]

@duffy44 nice to see someone is CF

 

[duffy44]

@dreambernie I actually found quite a few on reddit. But everyone else over here wants me to make babies

 

[dreambernie]

@duffy44 Make love not babies.. lol... sad.. but couldn't find any one even on reddit. You said west. Where from west. Because I am from Kolkata.

 

[brotherinchrist215]

@duffy44 Always remember in investing reaching the 1st double is always tough but compounding makes reaching its multiples easier

Ie it's easier to reach 2-3l once u reach 1l but reaching its double ie 10l will take time and patience

If u want to increase this pace its as simple as increasing your investments ie increase your monthly sip

Portfolio looks good but don't diversify too much

1/2 index ,large cap and small cap are enough

You've also done some tax saving elss that's good too.

And kolkata is indeed a great city

 

[silencespeaks21]

@duffy44 Do you intend to return back to India after your studies? If so, that's fine. If you're planning to stay in the US, you really need to read about the green card backlog. There is currently a 200+ year wait for Indians to recieve a green card. Which means you will never receive it in your lifetime. Being on an H1B visa your whole life means your life will never be stable and you will always have anxiety due to temporary status. You will be stuck with one employer like bonded laborer and won't have opportunities to change jobs or receive promotions, etc. On top of that, you will not be able to travel freely back home to even visit your family (1-2 years waiting time for H1B visa renewal appointments is the new normal).

My intention is not to discourage you, but for you to know the facts and make an informed decision. Our media does a terrible job of highlighting these issues and make students aware of these issues.

 

[duffy44]

@silencespeaks21 Correct. I'll do my research fully and take an informed decision. Thank you!

 

[relsavedbygrace]

@duffy44 For 50K worth of investments, you have got too much MF spread. I would suggest that you up your investments only in 1 or 2 funds. Maybe NIFTY 50 and a midcap fund.
Dont touch the FD and dont contribute anymore to it either. Keep renewing it, transfer interest to MF when sizeable.
Re: studying in US- go for a student loan from India. The payback period and interest charge begin only 2 years after your course ends. Check if student loan can also cover housing costs.
When in US, given that you have adequate time to pay your loan back- focus on exploring your field more and get a job aligned to your degree asap. Given the exchange rate parity, you will be able to pay back your education loan quite easily.
In 5-7 years time, at a minimum, you will still have 5L liquid FDs plus 6-10L of MF portfolio plus 4-5L given to your dad.
That’s 20L minimum- a great place to start for aiming FIRE by mid 40s.

 

[duffy44]

@relsavedbygrace Thanks man for this all round advice! I'll consider it.

 

[digofanart]

@duffy44 Do invest in PPF.

 

[zashmaster]

@duffy44 A blunt question. You have low expenses. How much are you actually investing per month? If this is not 50% of your income, at the least, then you have a lot to correct. You can consider the money given to father as your share of expenses. Add your travel to it. You should be investing the rest.

 

[duffy44]

@zashmaster I am investing around 13k max only in MF. The 3L I might make another FD from it. You're right need to rethink and strategise. Where else should I invest if not MF? I am not yet into stocks. Should I pump more in selected MFs?

 

[zashmaster]

@duffy44 My point did not come across clearly. It was about how much you are investing per month. Where you are investing comes later.

 

[evans1109]

@duffy44 Hi….Couple of points here -:
1. Too many mutual funds so decrease it to 5 max , 1 small cap, 2 flexi Cap, nifty 50 Index fund , Nasdaq100 ETF or MAFANG ETF
2. Move FD money to MF since you are just 27 in next 12 months and increase it by 15% as your salary grow
3. Also don’t limit your self for higher study in US and you can also think about with in India as well.
4. FIRE by 45 is easily achievable

5. Plan for real estate land after few years as well once higher studies are done

 

[duffy44]

@evans1109 Sounds pretty solid. Will revise the MF allocation.

 

[tempfunny]

@duffy44 Investments are fine. But till 2027, the period is quite short to get any significant returns from mutual funds. See if you can prepone your masters plan by this or next year. Don't worry about debt, you can land a good paying job if you are skilled enough. Paying back loans won't be too tough. But don't delay it too much, it gets a little complicated after 30. You'll need to focus on your health too and hustling in 30s is gonna be tougher than 20s.
FIRE might not be possible by 45 when you'll probably be debt free in mid 30s after masters.