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 not too long ago 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 reaching a cushty degree of monetary independence and making certain my son’s future portfolio within reason safe. On the time of writing, its worth is about 9.80% of my fairness MF retirement portfolio and 5.79% of my whole retirement portfolio.
Subsequently, I invested with out the worry of efficiency. There isn’t a experimentation or analysis within the inventory choice technique. That’s typically a waste of time and, due to this fact, a waste of true wealth = time. I proceed to spend money on the identical method. Loads of cash will be made in low-volatile, sturdy blue-chip shares.
Warning: No a part of this text needs to be handled as funding recommendation. I began investing in shares after my goal-based investing was in place. Readers should recognize that I began investing in shares after hitting the edge of monetary independence. So there is no such thing as a strain for me once I decide shares the best way talked about right here. Please do your analysis and purchase as per your circumstances.
My objective is to purchase shares with virtually zero analysis. I additionally proceed to spend money on mutual funds as regular.
I’ve bought mutual funds each month, no matter market ranges, and I shall attempt 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 isn’t just cash; Time is unquantifiable cash. Time wasted in inventory or mutual fund evaluation, the appropriate time to take a position, and so on., is an unquantifiable loss. So, I goal to purchase a fund or inventory inside a minute.
Zero ability is concerned in any side of my portfolio. I compensate for the lack of know-how with self-discipline. Randomness (aka luck) performs an enormous function within the return numbers (or lack thereof) beneath.
After evaluating the efficiency of low-volatility indices, I gained confidence in my capacity to spend money on shares. I advised myself I might not do any inventory evaluation or analysis. I might simply do a fast test of firm well being, a short volatility evaluate, 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 might function an emergency fund as a final resort. Possibly I’ll discover one other use for it sooner or later.
In FY 2020-21, this portfolio’s whole annual dividend revenue (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 turned about 70%. In FY 2023-2024, it was about 88%. In FY 2024-2025, it was about 100%.
The subsequent objective is to obtain one month’s bills as a complete quarterly dividend (post-tax!). I don’t consciously reinvest dividends. Youthful individuals 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 ultimate retirement portfolio. Additionally, see Methods to construct a second revenue supply that can final a lifetime.
Inventory choosing 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, An inventory of shares which have traded near their “all-time excessive:
- Don’t be afraid to select costly shares at an absolute value and valuation. Word: Worth investing could sound clever and attractive, however it’s riskier. I neither have the age to take such a threat nor the qualitative insights to select shares that the market has shunned, however they are going to be found sooner somewhat than later. To understand the danger 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 unsure, 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 not sensible to say no to an organization as a result of it pays large dividends! It is not sensible to promote a inventory as a result of it has an elevated dividend payout.
- All inventory buyers over ten years will obtain dividends, no matter whether or not they like them. Not like mutual funds, there is no such thing as a alternative.
- Dividends are usually not “additional” concerning returns/efficiency however symbolize actual revenue. It could possibly function a supply of revenue for an older investor, Constructing the perfect retirement portfolio. Youthful buyers won’t ever perceive this, and that’s tremendous.
- 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: Methods to purchase your first inventory with out breaking your head
Inventory Portfolio Evaluation
Replace: We not too long ago 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 June ninth 2025, all outcomes are computed utilizing our Google Sheets-based inventory and MF portfolio trackers.
Please be aware: (1) Though investments began in 2014, a lot of the cash invested is from July 2020.
(2) Resulting from different priorities, I didn’t make investments between November 2021 and April 2022. 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 spend money on shares which have gained probably the most since I began investing in them.
- Dividend Return = Whole Dividends divided by Whole Funding
- Capital Achieve (CG) Returns = Whole CG divided by Whole Funding
- Whole Return = Dividend Return + CG Return.
- CAGR = ( 1 + Whole Return ) ^ ( 1 / Avg. Years) – 1
- The typical funding period = 4.57 years for your complete portfolio. That is the common of all buy funding tenures weighted by the investments.
- CAGR is computed provided that the common years = > 1. XIRR needs to be taken severely provided that the common variety of years is => 1.
- All returns are earlier than tax.
- The portfolio is in contrast with equivalent 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 educational and regulatory conference. Solely purchases and redemptions by the investor needs to be used within the XIRR calculation. Dividends needs to be handled appropriately as reinvested (a rule additionally mandated by SEBI), and different company actions needs to be handled appropriately. The freefincal inventory tracker aligns with SEBI laws 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 evaluate it with the index, not the ETF (from ICIC), which was launched solely in 2017.
- Inventory portfolio (absolute return)* 36.16%
- UTI Nifty index fund (absolute return)* 85.32%
- Nifty Low Vol 30 TRI (absolute return)* 94.33%
- Inventory portfolio CAGR 6.99%
- UTI Nifty Index fund CAGR 14.45%
- Nifty Low Vol 30 TRI CAGR 15.65%
- Inventory Portfolio XIRR (together with all company actions like dividends and splits) 7.50%
- UTI Nifty Index fund XIRR 15.87%
- Nifty Low Vol 30 TRI XIRR 17.03%
* Whole return and CGAR embody liquidated holdings (see month-to-month replace archives for particulars).
The underperformance doesn’t hassle 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 revenue supply. I’ve had enjoyable constructing this with no effort and can proceed. Please do your analysis and make investments.
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