JOURNEY TO A CRORE

Journey to a Crore: From Humble Beginnings to Mutual Fund Success

Crore was a word associated with truly rich back then in 1998 .I started my working career way back in 1998 as a probationary officer at Canara Bank. During those initial years, I couldn’t save much as most of my earnings were spent traveling from Delhi to various locations like Kolar Gold Fields, Mysore, and Hyderabad, and helping out with expenses back home in Siwan. At that time, my focus was more on navigating my career rather than saving or investing for growth. crore was never in the mind.

Despite my early exposure to the stock market in 1992, where I invested on behalf of my father, my involvement was limited to IPOs. The process was cumbersome and time-consuming, as trading was manual and orders had to be sent to the nearest exchange in Patna for execution. Nonetheless, it gave me a fundamental understanding of stocks and how they could create wealth.

Early Career and Financial Struggles

In 2000, I left Canara Bank and joined the State Bank of India (SBI), once again being posted in South India. My initial posting was in MAHE, Pondicherry, where I lived from June to October 2000. Despite earning a salary of around Rs 12,000 per month and managing to save Rs 6,000 each month, an emergency at home forced me to liquidate my savings.

Subsequent postings took me to Thanjavur and Chennai, but despite my best efforts, my savings were minimal. My mother visited me in Thanjavur, and we took a memorable trip to Rameswaram, Trichy, and Thanjavur. Sadly, it was the only place she could visit me since I started working.

By the time I got transferred to New Delhi in 2003, my financial situation began to improve slightly. I started dabbling in direct stocks and mutual funds. My initial mutual fund investments were modest, funded by gifts from relatives. I invested Rs 6,000 each in Fidelity Long Term Equity and Reliance Long Term Equity over six months, totaling Rs 72,000 by 2004. I haven’t sold these investments, and their current market value stands at Rs 9,11,029—almost 12 times the initial investment.

The Beginning of Serious Investing

Around the same time, SBI was promoting its subsidiary SBI Mutual Fund, which piqued my interest. My first SIP in SBI mutual funds was Rs 2,000, which I gradually increased to Rs 10,000 by 2009. This continued without interruptions until 2014.

The journey of mutual fund investment was an eye-opener for me. I understood the power of systematic investing and the potential for long-term wealth creation. My portfolio saw steady growth, reinforcing my belief in mutual funds as a viable investment option.

The Real Estate Hurdle

In 2012, I booked a house in a new project in Noida, financing it through a bank loan and a personal loan. Despite the financial strain, I kept my SIPs running, and by 2014, my mutual fund investments had grown to Rs 12 lakhs.

A friend from school, who dealt in real estate, pitched me a resale deal in a nearing-completion housing project. Tempted by the promise of easy profits, I invested Rs 5 lakhs, but the deal fell through, and I had to buy the flat for Rs 25 lakhs. To cover the investment, I liquidated my mutual fund holdings and borrowed Rs 11 lakhs from my father-in-law, leaving me with no liquid investments.

Restarting the Investment Journey

It took me a while to restart my investment journey. I began again with a SIP of Rs 10,000, investing in a mix of SBI and HDFC mutual funds, including SBI Magnum Contra, SBI Blue Chip Fund, HDFC Mid Cap Fund, and HDFC Top 100 Fund. With each salary increment, I increased my SIP amount by Rs 5,000.

By the end of 2019, I was investing Rs 56,000 per month in SIPs. The onset of the COVID-19 pandemic in 2020 caused significant market turmoil, and I was tempted to stop my SIPs and redeem my investments. However, I stayed the course and even increased my SIPs by another Rs 5,000 to Rs 61,000 per month.

Staying the Course During COVID-19

In 2021, I continued to believe in the enduring power of equities over the long term. The markets recovered, buoyed by global economic policies, and my investments benefited from these highs. I increased my SIPs by Rs 10,000, reaching Rs 71,000 per month. My portfolio included SBI Blue Chip, SBI Focused Equity, SBI Magnum Contra, SBI Small Cap, HDFC Mid Cap, HDFC Top 100, HSBC Large Cap, HSBC Value Fund, HSBC Mid Cap, Parag Parikh Flexi Cap, and Quantum Long Term Equity.

Reaching the Milestone of one crore

Tracking my investments closely, I increased my SIPs to Rs 81,000 per month in 2022. Finally, in March 2024, my portfolio crossed the one-crore mark. This milestone was the result of disciplined investing, unwavering patience, and the power of compounding.

Reflections and Future Plans after a crore

Reaching the crore mark is a significant achievement, but it’s just a milestone in my financial journey. My goals have evolved to include securing my children’s education, ensuring a comfortable retirement, and exploring philanthropic activities. I plan to continue investing in mutual funds, adjusting my portfolio as needed to align with my evolving goals.

Conclusion

My journey to the first crore through mutual funds is a testament to the power of systematic investing and the benefits of staying disciplined. For anyone looking to achieve financial milestones, my story offers valuable lessons: start early, stay disciplined, diversify within your comfort zone, and keep learning. The journey might be long, but with the right approach, the destination is achievable.

Detailed Investment Strategy and Insights

1. Initial Struggles and Learning:
   • When I began my career, saving was a challenge due to constant relocations and family responsibilities. Despite these hurdles, my early exposure to the stock market laid a foundation for my future investment decisions.
   • Understanding the basics of stock trading during the 1990s, despite its manual and unreliable nature, gave me insight into market mechanics and the potential for wealth creation through equities.
2. Building the Habit of Investing:
   • After joining SBI in 2000, I experienced initial financial stability but struggled to save due to high living costs in Chennai. However, my transfer to New Delhi marked a turning point.
   • Starting small, my first significant investment in mutual funds was driven by gifts from relatives. This seed money was invested in Fidelity Long Term Equity and Reliance Long Term Equity funds. Despite market fluctuations, these investments grew significantly over 19 years, showcasing the long-term potential of mutual funds.
3. Understanding Market Dynamics:
   • My early investments in mutual funds were influenced by SBI’s promotion of its mutual fund subsidiary. Starting with an SIP of Rs 2,000, I gradually increased it to Rs 10,000 by 2009.
   • This period of consistent investing highlighted the importance of regular contributions and the power of compounding. My portfolio’s steady growth reinforced my belief in mutual funds as a key component of wealth creation.
4. Navigating Real Estate Challenges:
   • In 2012, I ventured into real estate, purchasing a house in Noida. Despite the financial strain, I continued my SIPs, demonstrating the importance of maintaining investment discipline even during major financial commitments.
   • A subsequent real estate deal, influenced by a friend’s advice, led to a significant financial setback. I had to liquidate my mutual fund holdings and borrow funds to cover the investment, leaving me with no liquid assets. This experience underscored the risks associated with real estate investments and the importance of liquidity.
5. Rebuilding and Increasing Investments:
   • After the setback, I restarted my mutual fund investments with a SIP of Rs 10,000, focusing on a mix of SBI and HDFC funds. Incremental increases in SIP amounts with each salary hike allowed my portfolio to grow steadily.
   • By 2019, I was investing Rs 56,000 per month in SIPs. Despite the market turmoil caused by the COVID-19 pandemic in 2020, I maintained my investments, even increasing my SIPs to Rs 61,000 per month. This decision paid off as markets recovered, validating the importance of staying invested during downturns.
6. Consistency and Adaptation:
   • In 2021, I continued to believe in the long-term potential of equities, increasing my SIPs to Rs 71,000 per month. My portfolio included a diverse range of funds such as SBI Blue Chip, SBI Focused Equity, HDFC Mid Cap, and HSBC Large Cap.
   • By closely monitoring my investments and adapting my strategy, I increased my SIPs to Rs 81,000 per month in 2022, culminating in my portfolio crossing the one-crore mark in March 2024. This milestone was a testament to the power of disciplined investing and the benefits of compounding.

Key Takeaways for Aspiring Investors

1. Start Early:
   • The earlier you start investing, the more time your money has to grow. Even small amounts can compound significantly over time, as demonstrated by my early investments in mutual funds.
2. Stay Disciplined:
   • Regular investments, even during market downturns, are crucial. Maintaining SIPs during the COVID-19 pandemic allowed me to benefit from the subsequent market recovery.
3. Diversify Within Comfort Zone:
   • While diversification is important, it’s equally crucial to invest in instruments you understand. My focus on equity mutual funds, avoiding debt, sectoral, and international funds, aligned with my risk tolerance and understanding.
4. Continuous Learning:
   • Staying informed about market trends and continuously learning can help you make better investment decisions. My journey involved adapting my strategy based on market conditions and personal financial goals.