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Born and brought up in Bhatinda of Punjab, 38-year-old Sandeep Nagpal has been a strong believer in disciplined investing. He works with a public-sector insurer and his wife works as a lecturer in the Punjab School Education Board. The father of a 12-year-old boy and a five-year-old girl, Sandeep gives his mother credit for making him aware of the importance of money since childhood. "My mother has always believed in saving money before spending. Despite limited income and a joint family, we got a good education just because of her saving habits," says Sandeep. He did his B.Tech in electronics and communication from Punjab Technical University and began his professional life in 2006 as an engineer with a monthly salary of around Rs 4,000. Later in 2007, he moved to a technical role in an IT company and then in 2009, he switched to a public-sector insurance company.
The beginning of his investment journey
During the early days of his career, he started his investment journey with Sundaram Tax Saver Fund in 2007. This equity-linked saving scheme (ELSS) gave him the first taste of mutual funds and he then kept investing in different funds but without maintaining any consistency. In 2011, he accelerated his mutual fund journey by investing in Franklin India Bluechip Fund, HDFC Top 200 Fund (now HDFC Top 100 Fund) and Reliance Equity Fund. "I was introduced to mutual funds through different newspapers and the website of Value Research," says Sandeep. He has been a regular reader of Value Research since 2010-11 and a subscriber of 'Mutual Fund Insight'. He tracks his portfolio through Value Research's 'My Investments' tool.
His investment preferences
An aggressive investor, Sandeep invests almost 90 per cent of his net worth in equity mutual funds. He manages both his and his wife's portfolio together as a set and his mutual fund holdings are currently giving an annualised return of around 18 per cent. He invests in direct plans and his current portfolio includes Parag Parikh Flexi Cap Fund, ICICI Prudential Long Term Equity Fund, HDFC Balanced Advantage Fund and Kotak Focused Equity Fund. While choosing a mutual fund, he takes into account the fund's past performance as well as the philosophy of the fund house.
The remaining 10 per cent of his portfolio comprises the PPF, the EPF and gold. While the investments in the PPF are meant for debt allocation and portfolio diversification, gold is for personal consumption in the form of jewellery. Sandeep is now enjoying the fruits of years of disciplined investing. "In July 2021, my portfolio crossed the magical figure of eight digits," exclaims the disciplined investor.
Unlike how Value Research recommends, Sandeep makes most of his investments through lump sums rather than SIPs. He likes the freedom that comes with the former but makes sure that he invests regularly with discipline. Choppy markets such as the one being faced by investors these days do not bother him much, as he does not look at his portfolio on a frequent basis. He continues with his SIPs and puts additional lump sums whenever the market goes down sharply.
Detours, misadventures and learnings
Sandeep sold off all his mutual fund investments in 2014 to buy a plot. "The real estate turned out to be a dead investment and I had to sell my plot in 2018 at the same price at which I purchased it," says Sandeep. He also dabbled in stocks for a short period of two years, as he started taking interest in the stock market. "I invested in direct equity in 2016 but was not able to devote enough time for all the research required for the same. I sold out my direct equity portfolio around 2018 and moved entirely to mutual funds. My current equity portfolio consists of direct mutual funds only," he quips. He now understands the potential of mutual funds as a wealth-creation tool and has not sold any funds since 2016. This was also the time when his wife started working, which increased not only the family's investment capacity but also boosted its regular income. This further reduced his dependence on investments for meeting expenses.
Understanding the heads and tails of investing
Sandeep understands the benefits of rupee cost averaging. In March 2020, when the stock market was in turmoil because of COVID-19, he not only maintained his calm but also invested more on top of his investments. While talking about his investing expedition, he says, "This journey has been very eventful, wherein I saw the drawdown of March 2020, sideways movement during 2017-19 but I kept adding to my mutual funds." He adds, "Reading articles on VRO has helped me stay calm during panic crashes of the market." He is a disciplined investor who believes that it is possible to be wealthy through mutual funds, but one has to have some process in place. "I invest heavily in my funds per month and wish to do the same for the next 10 years," says Sandeep.
His financial goals
According to him, he is on track to meet all his goals, comprising purchasing a house in the next five years, funding his kids' education, which is 10 years away and taking care of his retirement needs. He will get an inflation-protected pension from his employer, along with a lifetime of health cover. The former is sufficient to cover him for retirement. Further, he has taken a term insurance plan for Rs 1 crore on top of the Rs 1.5 crore term plan provided by his employer. Now, he is also considering a separate term plan for his wife. Sandeep follows Value Research to keep himself abreast of the new developments in the world of investments. He also admires Warren Buffett and Charlie Munger for their advice.
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This article was originally published on March 28, 2022.
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