The disciplined investors | Value Research Debadideb Datta's story is an interesting case of the transformation of a saver into an investor, while not letting the stumbling blocks discourage him
How I Did It

The disciplined investors

Debadideb Datta's story is an interesting case of the transformation of a saver into an investor, while not letting the stumbling blocks discourage him

Working for the non-profit sector, travelling to offbeat places and love for animals, especially stray dogs, are Debadideb Datta's passions. Datta used to read Mutual Fund Insight at a stall in the C R Park market. He has been living in Delhi for the last 15 years. Over the years, he grew fond of the publication and now subscribes to its online version. He and his wife, Ananya, started investing in mutual funds soon after their marriage. The proceeds from these came handy when the Dattas bought their apartment and that is also why they had to go for only a very small amount of home loan. Read on to know more about his fascinating investment journey.

The avid saver
Though his family was reasonably well off, Debadideb grew up seeing his parents being careful about how money was spent. He studied finance, while Ananya has a masters in psychology. But it is Ananya who is to be credited for most of their savings as she is the one who is more disciplined in this matter. "I make most of the investment decisions but she is aware of all the important changes in our portfolio," he says, hinting at the secret of achieving marital harmony when it comes to money matters.

With his education and training mostly in the field of finance, Debadideb took the road less travelled. Early in his career, he shifted to the non-profit sector and helped set up a suicide-prevention centre in Kolkata. Later, he moved to Delhi and worked in youth development and rural development during the past 15 years. Currently, he sits on the boards of several non-profits. Ananya also worked with several reputed non-profits before she decided to quit about five years back.

The compensation in non-profits used to be very low when Dattas started off. Thus, it was important for them to plan finances carefully and start saving regularly, even if it did force them to penny pinch.

Recounting his very first investment, Debadideb talks about how he invested a princely sum of Rs 10,000 in the IPO of Andhra Bank in 2001. "The shares were issued at par and soon after listing fell below face value. But we held on and the company gave handsome dividends for many years. We sold the shares off at about Rs 85 per piece to pay for the down payment on our apartment," he notes.

Coming across mutual funds and Value Research
Debadideb and Ananya started investing in mutual funds soon after marriage. "Much of the original investment came from our wedding gifts. The proceeds from these came in handy when we bought our apartment and that is why we had to go for only a very small amount of home loan," he says.

Debadideb's brush with Value Research happened after he came to Delhi. "I would regularly read personal finance magazines to help understand mutual fund investments. However, at that time Value Research's magazine was way more expensive than the competition so I would try to read it for free at the magazine stall in the C R Park market. It was only during the last seven to eight years that I started subscribing to the online version and have read it regularly," he says.

Researching mutual funds
Datta uses the VR star rating of funds to first shortlist funds. After that, he looks at the three-to-five-year performance against its peers, investment philosophy of the fund manager and how the fund has performed during the worst market crashes and sharp upswings. "Finally, I look at the exit loads, expense ratio, ease of executing online transactions before I make the final choice," Debadideb shares his methodology.

He religiously uses the Portfolio Manager tool on VRO. It is extremely useful, according to him, and helps track the performance of his investments clearly.

The other VRO tools that he finds particularly useful are Fund Selector, P2P Returns Calculator, Fund Compare and Category Compare (now Fund Monitor). "We have never had a financial advisor as every time we sought advice, we were pushed unnecessary products like ULIPs. We are happy with our own DIY approach and feel confident about achieving our investment goals," says Debadideb.

Today, his investments consist solely of mutual funds apart from the emergency fund, which is held in a dedicated savings bank account. He is a bit ashamed to confess that there are 15 funds in his portfolio. "It is way more than what is ideal, but then I sometimes get greedy on seeing the stellar performance of some funds. Among these, there are four different liquid funds, one from each fund house, wherein I park lump sums for STPs to equity funds," Datta reveals his smart strategy.

Peculiarly, Debadideb has not had a single SIP. He prefers to invest the maximum amount possible every month and manually allocates between debt and equity to maintain a 30-70 ratio.

"2017 is a break year for me as I am not working. Since there are no new investments being made in the current year, I have recalibrated the investments to a 50-50 debt-equity ratio. The top holdings in my portfolio are ICICI Prudential Value Discovery, Parag Parikh Long Term Value (now Parag Parikh Flexi Cap Fund), Axis Long Term Equity and ICICI Prudential Child Care Study (now ICICI Prudential Child Care Fund - Gift Plan)," says Datta, who only invests in direct plans and in growth schemes. Dividends doesn't interest him, nor is he interested in paying commissions to 'middlemen'.

Investment mistakes
Like most of us, emotions have wreaked havoc on his investments, too. In 2006 when the Sensex was at 11k, he tried to time the market and took everything out of mutual funds, expecting an impending fall. "But markets kept moving up and when the Sensex reached 20k in 2007, I went all in again only to see the value of my investments almost halve within a few months. And like a fool, I tried to cut my losses and liquidated the funds again," he discloses. That experience taught Debadideb a hard lesson. Since then, he has always kept a watch on the debt-equity mix of funds and has not been swayed by market movements or television chatter. In the future, Datta also wants to correct another bad habit: giving up on some products too soon.

Asked about key lessons in his personal finance journey, Debadideb lists out simple mantras. Firstly, it is very important to live well within one's means. "That is the only way one can start saving from an early age. This also ensures that one never gets into debt," he quips.

To the Dattas, the only acceptable form of debt is home loan and other loans taken during family emergencies. Debadideb believes even the latter category of debt can often be avoided through proper insurance and by providing for an adequate emergency fund.

Lastly, Dattas feel a good investor needs to choose investment products carefully and then stick to them. "Cut out the market chatter and keep rebalancing your portfolio to maintain the debt-equity ratio," Debadideb signs off.

This story first appeared in February 2018.

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