This text compares my inventory portfolio with an equal funding in a Nifty index fund and the Nifty 100 Low Volatility 30 TR index. We publish this comparability every month. Earlier than we start, new readers want to understand the context of those investments.
Replace: We just lately added a brand new software to the freefincal investor circle – Determine shares with earnings energy with this new software. See outcomes: Earnings energy valuation of my portfolio shares.
I began direct fairness investing solely after attaining a snug stage of monetary independence and making certain my son’s future portfolio in all fairness safe. On the time of writing, its worth is about 9.85% of my fairness MF retirement portfolio and 5.85% of my complete retirement portfolio.
Due to this fact, I invested with out the worry of efficiency. There isn’t any experimentation or analysis within the inventory choice technique. That’s usually a waste of time and, due to this fact, a waste of true wealth = time. I proceed to put money into the identical method. Loads of cash may be made in low-volatile, strong blue-chip shares.
Warning: No a part of this text must be handled as funding recommendation. I began investing in shares after my goal-based investing was in place. Readers should admire that I began investing in shares after hitting the brink of monetary independence. So there isn’t a stress for me after I choose shares the way in which talked about right here. Please do your analysis and purchase as per your circumstances.
My aim is to purchase shares with virtually zero analysis. I additionally proceed to put money into mutual funds as common.
I’ve bought mutual funds each month, no matter market ranges, and I shall try to repeat this uninteresting technique for direct fairness if I’ve the cash. Additionally, see Fourteen Years of Mutual Fund Investing: My Journey and Classes Realized.
Time is not only cash; Time is unquantifiable cash. Time wasted in inventory or mutual fund evaluation, the correct time to speculate, and so on., is an unquantifiable loss. So, I intention to purchase a fund or inventory inside a minute.
Zero talent is concerned in any side of my portfolio. I compensate for the lack of information with self-discipline. Randomness (aka luck) performs an enormous position within the return numbers (or lack thereof) beneath.
After evaluating the efficiency of low-volatility indices, I gained confidence in my capability to put money into shares. I instructed myself I might not do any inventory evaluation or analysis. I might simply do a fast test of firm well being, a short volatility overview, and purchase. If I can’t purchase a inventory inside a couple of minutes, I’m losing money and time (in that order).
The inventory portfolio is a part of my retirement portfolio basket as a dividend supply. It may function an emergency fund as a final resort. Perhaps I’ll discover one other use for it sooner or later.
In FY 2020-21, this portfolio’s complete annual dividend earnings (pre-tax) was about 30% of my present month-to-month bills. In FY 2021-2022, it elevated to about 56%. In FY 2022-23, it grew to become about 70%. In FY 2023-2024, it was about 88%. In FY 2024-2025, it was about 100%.
The following aim is to obtain one month’s bills as a complete quarterly dividend (post-tax!). I don’t consciously reinvest dividends. Youthful folks ought to. It issues little so long as the general funding made every month retains rising wholesome: How ten years of monitoring investments modified my life.
This inventory portfolio is a part of my general retirement portfolio. I’m striving to construct the preferrred retirement portfolio. Additionally, see How you can construct a second earnings supply that may final a lifetime.
Inventory selecting technique
- Select shares with little or no analysis or evaluation.
- Select low-volatility shares with sound monetary well being (low debt is a minimal requirement)
- Select shares that commerce near their all-time highs (approx momentum indicator). See, for instance, A listing of shares which have traded near their “all-time excessive:
- Don’t be afraid to choose costly shares at an absolute worth and valuation. Be aware: Worth investing might sound clever and attractive, however it’s riskier. I neither have the age to tackle such a threat nor the qualitative insights to choose shares that the market has shunned, however will probably be found sooner somewhat than later. To understand the chance related to worth investing and why it’s extra qualitative than quantitative, see this evaluation: Is it time to exit ICICI Worth Discovery & Quantum Lengthy Time period Fairness?
- When doubtful, ask your spouse when she is about to go to sleep within the afternoon.
- Don’t worry dividends (or dividend taxation).
- What issues primarily is corporate well being. Whether or not it’s a dividend payer or not is incidental. It is senseless to say no to an organization as a result of it pays big dividends! It is senseless to promote a inventory as a result of it has elevated dividend payout.
- All inventory traders over ten years will obtain dividends, no matter whether or not they prefer it. There isn’t any alternative, in contrast to mutual funds.
- Dividends should not “further” concerning returns/efficiency however signify actual revenue. It may possibly function a supply of earnings for an older investor, Constructing the best retirement portfolio. Youthful traders won’t ever perceive this, and that’s high-quality.
- Peaceable sleep is the most effective type of realised positive aspects, therefore the significance of low volatility and affordable momentum to enterprise well being (not all shares in my portfolio will test all these bins).
- That is the archive of earlier portfolio updates.
Associated movies: How you can purchase your first inventory with out breaking your head
Inventory Portfolio Evaluation
Replace: We just lately added a brand new software to the freefincal investor circle – Determine shares with earnings energy with this new software.
See outcomes: Earnings energy valuation of my portfolio shares
That is the portfolio evolution.
As of April twenty first 2025, all outcomes are computed utilizing our Google Sheets-based inventory and MF portfolio trackers.
Please word: (1) Though investments began in 2014, a lot of the cash invested is from July 2020.
(2) I didn’t make investments between November 2021 and April 2022 on account of different priorities. On the time of writing, the final funding was made in October 2022. The portfolio weights have drifted naturally. After I can make investments, I attempt to chase momentum throughout the portfolio and put money into shares which have gained essentially the most since I began investing in them.
- Dividend Return = Complete Dividends divided by Complete Funding
- Capital Achieve (CG) Returns = Complete CG divided by Complete Funding
- Complete Return = Dividend Return + CG Return.
- CAGR = ( 1 + Complete Return ) ^ ( 1 / Avg. Years) – 1
- The typical funding period = 4.43 years for all the portfolio. That is the typical of all buy funding tenures weighted by the investments.
- CAGR is computed provided that the typical years = > 1. XIRR must be taken significantly provided that the typical variety of years is => 1.
- All returns are earlier than tax.
- The portfolio is in contrast with an identical investments into UTI Nifty 50 Index Fund (direct plan!)
Many individuals and portals mistakenly deal with dividends as money payouts whereas calculating XIRR. This isn’t the universally accepted tutorial and regulatory conference. Solely purchases and redemptions by the investor must be used within the XIRR calculation. Dividends must be handled appropriately as reinvested (a rule additionally mandated by SEBI), and different company actions must be handled appropriately. The freefincal inventory tracker aligns with SEBI rules for all company actions (dividends, splits, buybacks, and so on.)
Comparability with benchmark
The Nifty 100 low vol 30 is a greater benchmark for this portfolio. Nevertheless, we will solely examine it with the index, not the ETF (from ICIC), which was launched solely in 2017.
- Inventory portfolio (absolute return)* 35.03%
- UTI Nifty index fund (absolute return)* 77.62%
- Nifty Low Vol 30 TRI (absolute return)* 88.02%
- Inventory portfolio CAGR 7.00%
- UTI Nifty Index fund CAGR 13.83%
- Nifty Low Vol 30 TRI CAGR 15.29%
- Inventory Portfolio XIRR (together with all company actions like dividends and splits) 7.50%
- UTI Nifty Index fund XIRR 15.31%
- Nifty Low Vol 30 TRI XIRR 16.73%
* Complete return and CGAR embrace liquidated holdings (see month-to-month replace archives for particulars).
The underperformance doesn’t trouble me a lot as a result of the inventory portfolio is a small portion of my retirement corpus, and I deal with it as a future earnings supply. I’ve had enjoyable constructing this with no effort and can proceed. Please do your analysis and make investments.
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