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 grasp the context of those investments.
Replace: We just lately added a brand new software to the freefincal investor circle – Establish 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 guaranteeing my son’s future portfolio is fairly safe. On the time of writing, its worth accounts for about 9.47% of my fairness MF retirement portfolio and 5.66% of my complete retirement portfolio.
Due to this fact, I invested with out the concern 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 put money into the identical method.
Warning: No a part of this text ought to be handled as funding recommendation. I began investing in shares after establishing my goal-based investing technique. Readers ought to admire that I started investing in shares after reaching monetary independence. Due to this fact, I’ve no stress when choosing shares, as talked about right here. Please conduct your analysis and buy accordingly based mostly in your circumstances.
My aim is to purchase shares with virtually zero analysis. I additionally proceed to put money into mutual funds as typical.
I’ve bought mutual funds each month, no matter market ranges, and I’ll attempt to copy this strategy with direct fairness if I’ve the cash. Moreover, see ‘17 Years of Mutual Fund Investing: My Journey and Classes Discovered.’
Time is not only cash; Time is unquantifiable cash. Time wasted in inventory or mutual fund evaluation, the precise time to speculate, and many others., 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 understanding with self-discipline. Randomness (also called luck) performs a big function within the return numbers (or lack thereof) under.
After evaluating the efficiency of low-volatility indices, I gained confidence in my potential to put money into shares. I instructed myself I might not do any inventory evaluation or analysis. I might conduct a fast verify of the corporate’s well being and a quick volatility assessment earlier than making a purchase resolution. 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. Possibly I’ll discover one other use for it sooner or later.
In FY 2020-21, the full annual dividend earnings from this portfolio (pre-tax) was roughly 30% of my present month-to-month bills. In FY 2021-2022, it elevated to about 56%. In FY 2022-23, the proportion elevated to roughly 70%. In FY 2023-2024, the speed was roughly 88%. In FY 2024-2025, the speed was roughly 100%.
The subsequent 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 continues to develop healthily: How 13 years of monitoring investments helped me construct wealth.
This inventory portfolio is a part of my total retirement portfolio. I’m striving to construct the supreme retirement portfolio. Additionally, see The best way to construct a second earnings supply that may 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, A listing of shares which have traded near their “all-time excessive:
- Don’t be afraid to choose 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 choose shares that the market has shunned, however they are going to be found sooner quite 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 concern dividends (or dividend taxation).
- What issues primarily is corporate well being. Whether or not it’s a dividend payer or not is incidental. It doesn’t make sense to reject an organization simply because it pays enormous dividends! It is senseless to promote a inventory as a result of it has an elevated dividend payout.
- All inventory traders holding their inventory for over ten years will obtain dividends, no matter whether or not they like them. In contrast to mutual funds, there is no such thing as a alternative.
- Dividends should not “additional” relating to returns/efficiency however signify actual revenue. It might function a supply of earnings for an older investor, Constructing the best retirement portfolio. Youthful traders won’t ever perceive this, and that’s effective.
- Peaceable sleep is one of the best type of realised beneficial properties, therefore the significance of low volatility and affordable momentum to enterprise well being (not all shares in my portfolio will verify all these containers).
- That is the archive of earlier portfolio updates.
Inventory Portfolio Evaluation
Replace: We just lately added a brand new software to the freefincal investor circle – Establish shares with earnings energy with this new software.
See outcomes: Earnings energy valuation of my portfolio shares
That is the portfolio evolution.
As of Sep tenth 2025, all outcomes are computed utilizing our Google Sheets-based inventory and MF portfolio trackers.
Please observe: (1) Though investments began in 2014, many 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. Once I can make investments, I put money into shares which have gained probably the most since I began investing in them (throughout the portfolio).
- 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 = 4.82 years for the whole portfolio. That is the common of all buy funding tenures weighted by the investments.
- CAGR is computed provided that the common years = > 1. XIRR ought to be taken critically provided that the common 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 ought to be used within the XIRR calculation. Dividends ought to be handled appropriately as reinvested (a rule additionally mandated by SEBI), and different company actions ought to be handled appropriately. The freefincal inventory tracker aligns with SEBI rules for all company actions (dividends, splits, buybacks, and many others.)
Comparability with benchmark
The Nifty 100 low vol 30 is a greater benchmark for this portfolio. Nevertheless, we are able to solely examine it with the index, not the ETF (from ICIC), which was launched solely in 2017.
| Inventory portfolio (absolute return)* | 39.78% |
| UTI Nifty index fund (absolute return)* | 85.29% |
| Nifty Low Vol 30 TRI (absolute return)* | 103.60% |
| Inventory portfolio CAGR | 7.19% |
| UTI Nifty Index fund CAGR | 13.63% |
| Nifty Low Vol 30 TRI CAGR | 15.88% |
| Inventory Portfolio XIRR (incl all company actions like dividends and splits) | 7.72% |
| UTI Nifty Index fund XIRR | 15.00% |
| Nifty Low Vol 30 TRI XIRR | 17.19% |
| The acquire from dividends is | 9.04% |
* Whole return and CGAR embrace 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 earnings supply. Please do your analysis and make investments.
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