The investing journey of Prahlad is inspiring and proves that knowledge and being consistent are vital in achieving financial success
12-Dec-2022 •Sneha Suri
Settled in Hyderabad with his homemaker wife and two kids, Prahlad Patidar works as a project manager for TCS. He has been in the IT industry since late 2001 and has worked internationally for 9-10 years in different countries.
It's been quite a journey. Born in Narayangarh village in Madhya Pradesh to a farming family in 1976, Prahlad recalls that even though money was in short supply, the basics always got covered.
"My father's money mantra was to borrow money from private lenders to buy more farms in order to increase income. He'd then pay back the loan by earning from the farms. Once the loans were settled, he'd buy more farms by borrowing again. This continued until I went to college, and it was then that my father stopped buying farms and funded my higher education," he recalls.
Prahlad's only hobby is to read, read and read. He started reading newspapers during his college in order to learn and improve his English. Soon he shifted to financial dailies, especially Business World magazine. And this is what got him interested in the world of business, finance and eventually mutual funds.
"The idea of saving for the future was always with me from the very beginning," says Prahlad.
In the first two years of his professional journey, he didn't have enough money to save, but he spent lots of time on the internet, exploring and learning about mutual funds.
When he got married in 2005, he had enough monthly surplus, and it was then that he started his fund-investing journey. "My first investment was in Tata Service Industries Fund. Since I was working in the IT industry, I got enamoured by this fund." Later in the same year, based on his research, he started a couple of SIPs of Rs 2,500 each in some funds through an agent.
During this time, he also started reading personal finance magazines to get money savvy. "These magazines helped me build my understanding around savings, spending discipline, right investing instruments, money management etc., to a great extent."
It was around 2005-2006 that he discovered Value Research. "It soon became my Bible for learning and investing. I unsubscribed from all the personal finance magazines later and relied completely on the knowledge provided by this portal. VR Online's star ranking system became my only evaluation criteria," he says.
At one point, he desired to become a mutual fund agent but had to drop the idea as his company moved him to the UK for three years.
Most of his savings are in mutual funds (majorly equity funds for the long term), with a tiny amount in PPF. His current asset allocation in mutual funds is 86-10-4 per cent across equity, debt and gold.
He invests very less in direct stocks, given the time commitment and monitoring required.
However, he has become more extravagant with his mutual fund investing - transitioning from large- to mid- to now small-cap funds. There are debt funds in his portfolio too, and he uses them to either have STP (systematic transfer plan) or to stabilise his overall portfolio corpus. As for his investments in gold, he started investing this year.
What analysis does he put in while analysing a mutual fund? "I always invest via SIPs, and I look at the funds' ratings on VRO and choose either 4- or 5-star funds. If the rating falls below 3-star, I switch to another fund."
The practice of frequent switching, in our opinion, is not sustainable as it can subject one's portfolio to taxes and/or exit loads. Prahlad agrees, "Taxes and exit loads are important issues, but this was a practice I used to follow a lot more seriously before the introduction of LTCG. Now I do not do this."
He aims to increase his SIP contribution depending on his capacity. "Every year in December I review my investments and take a call based on the same."
Navigating the bad phases
Having been an investor for over 15 years, Prahlad has also experienced the rough-and-tumble side of investing. He has seen everything from market crashes in 2008 and 2020 to the Franklin Templeton debacle.
He also got swayed by free advice on the internet and financial magazines, ending up with investments across many funds. "I soon realised my folly," he says.
He unwittingly took to ULIPs too. Around 2004, on the advice of one of his brokers, he invested in a ULIP to save tax. But later, having done his research, he found out the downsides of ULIPs. "I never paid the next instalment... this experience taught me about ELSS (Equity Linked Saving Scheme aka tax-saving mutual funds)."
The lows have hardly dented Prahlad's confidence. On the contrary, he believes his investment journey still has many miles. As long as he has surplus money, he will keep investing.
Ask him about his successes, he lists these three points - "being regular with my investments, investing backed by sound knowledge and not panic selling - and leaves the rest on Bhagwat Gita's timeless wisdom of 'do your best karma today and leave the rest".
"I don't like to worry about the future if I am doing my best today," he signs off.