How I Automated My Goal Based Investing in 2022? Simplified Things With a Mature Process-Based Approach

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How I Automated My Goal Based Investing

In this article, I will talk about how I automated my goal based investing approach in 2022. This was the year of my intensive learning about personal finance. All thanks to Freefincal (the bible of DIY Investing in India, according to me) and Pattu Sir (the Calculator Baba). Ultimately, I completely shifted to a mature process-based approach and with the help of the right courses and tools, I was able to automate my investing.

Previously, I discussed an accident that happened in 2016 and changed my life. I also talked about how I started my investment journey from scratch and began using various investment products such as RD, FD, NSC, and various Mutual Funds.

Additionally, I shared my thoughts on how a financial planning course shattered my preconceived notions about personal finance and led me to reorganize my planning. I did my first portfolio review in 2020. I also talked about how a meeting with a CFA (Certified Financial Advisor) boosted my confidence to be a DIY (Do It Yourself) Investor, where I shared my 2nd portfolio review in 2021.

I would request the readers to complete the previous articles about my journey so that they can understand how my thought process of investing changes over time.

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In realfinplan, we try to provide realistic, authentic, unbiased, and free educational content, so that individuals can control their finances by themselves. I will request the readers

With Goal based investing I started To Achieve My Goals

After the portfolio review of 2021, I continued my regular SIPs for my short-term goals, and with proper planning, I started to achieve my short-term goals easily. Also continued my investing for long-term goals.

I chose three funds for my child’s education goal as there was just a little overlap among these 3 funds (thefundoo.com is a great website. I used this for checking overlap between funds). I chose 6 months of duration for staggered lumpsum.

  1. Mirae Asset Tax Saver Fund
  2. Parag Parikh Flexi Cap Fund
  3. Axis Small Cap Fund  

I kept the above investment strategy going for 6-7 months till my staggered lump sum was done. While analyzing my financial situation, I realized that my short-term goals and basics are almost sorted.

  • Jewellery goal – successfully achieved (still have some to buy another ornament)
  • Emergency Fund – Successfully achieving, with 5 months of expenses as of then
  • Recurring goals – achieved for this year and sorted for the next year
  • Car goal – ongoing 
  • Vacation goal – sorted

The Questions That Bothered Me A Lot

Now, all I needed was to take care of my long-term goals. In October month of 2022, I started to think more seriously about all the 3 long-term goals, mainly or especially “Child Education Planning”. Because I was stuck in this. If I can sort this out, I can sort out retirement & marriage planning too. I knew it. But I don’t feel comfortable. So many questions are coming to my mind.

  • Is it even possible to complete a child’s Education goal?
  • How to do it? Investyadhna guys say that asset allocation is the most important thing but not that important for goal-based investing. Is this even true?
  • 100% – your age = that should be maintained they said. But how?
  • Is there any foolproof thumb rule?
  • Why do I feel asset allocation is important now? Why not a few years ago?
  • I am thinking of a post-tax return of 12% for this goal. Is it okay or an absurd expectation?
  • I am thinking about only investing in equity for this goal. Is it the right thing to do?
  • If anything happens to the market at the goal end year, what will I do? Like corona happened
  • Why am I feeling like I am taking too much risk? 
  • Why don’t things feel right and comfortable?
  • If I want to reduce risk I will have to shift corpus from equity to debt when the goal is near the deadline. But when will I have to do it and how?
  • How to reduce risk in a proper way?
  • Is there anything like the best strategy to control the risk?
  • What kind of education should I keep in mind for planning?
  • How much to expect from my portfolio?
  • How much can I invest?
  • How much investment is needed?
  • Is there any calculator available where I can play with real numbers?
  • Where can I find them? How can I use them?
  • Is there any intensive goal-planning calculator for Education Planning?
  • I am using 3 equity funds for my child’s Education goal. I am thinking about adding an index to this also. Is it okay?
  • Parimal Ade always says that a financial journey should be boring. Why is it full of excitement when it comes to mine?
  • Is there any strategy to get things in auto mode and be boring?

While thinking about the main 3 goals, I realized many things about mutual funds as I spent 4 years with MFs.

  • Saw a recent performance drop in the PPFC fund due to SEBI regulations and some international factors and a sudden excessive increase in AUM. So, it’s happening for this flagship fund also.
  • Some funds were so well performing before. But after the COVID crash, their performance dropped (all the axis mutual equity funds)
  • Some funds were not performing well before but now performing awesome (Quant equity funds)
  • After watching some videos I realized that it is so hard to beat the large-cap index like Sensex or Nifty 50 or Nifty 100 for active large-cap funds
  • But now also realize that it is also true for midcap funds. It’s hard to beat the Nifty MidCap 150 index.
  • But there are some funds that beat the index consistently. But there are also some funds which can’t beat it.
  • There is also another fact – a fund is consistently beating the index or benchmark for now, but it may not be the same in the future.
  • So, in short, any kind of active fund may not live up to your expectations 
  • So, there are so many other risks in mutual funds besides just market cap-based risk (like small-cap and mid-cap funds are riskier than large-cap funds).

Leaning towards index investing

So, many questions were arising in my mind

  • Why run after the best fund?
  • Why run after the best active fund when there is fund manager risk?
  • Why run after benchmark outperformance?
  • Why run after an active fund when there is an AUM increase risk?
  • If a fund starts underperforming, I will have to change the fund. So how many times will I have to do this throughout my life? Why make the financial journey high maintenance?
  • Every fund goes through rough patches, how to handle things then?
  • Active funds’ expense ratio is also high when compared to index funds. Is it a really mature thing to go for an active fund when there are so many kinds of risks involved? I mean you pay 3-5 times the expenses and your funds will not be able to beat an index

See, I am now more leaning toward index Investing. I felt index Investing is way better for achieving goals. I just have to expect less. Some index funds are on my radar.

  • NIfty N50 
  • Axis N100 
  • MC150 Q50
  • Nifty 200 momentum 30
  • S&P LowVol
  • But only started investing in Nifty Next 50 (NN50) besides Nifty 50 (N50) for the Marriage goal in the previous year

But again I also have some questions in my mind regarding index Investing

  • How to choose? I knew some things but I also felt about doing some more research
  • Is it possible to build an index-based portfolio? If yes, then how to do that?
  • How many index funds should be there for a single-goal portfolio?
  • After watching a review of NN50 by Investyadhna, I found out that it’s not a proper large-cap index. It is a lot more volatile than N50 and it performs well when mid and small-caps perform well. Then what is it actually? Is it wise to take only the NN50 index as the equity portion for a goal? (I was using it for the marriage goal)
  • If not, then I should use a mix of N50 and NN50. I will use it for my retirement portfolio. But what is a good mix?
  • Can I use an active fund with an index? How to use this combination?

Resources I Used To Automate My Goal Based Investing

Started to search on YouTube about index Investing. Started watching Pattu sir’s thought process regarding Index investing. And wow!!! I started to get answers to all my questions on index Investing.

Began to read a lot of articles on index Investing and personal finance in Freefincal. Now I realize that it’s a gem of a platform for DIY investors (I didn’t know the term before, I didn’t know that I was inching towards DIY investing). I started to get a lot of answers that were revolving around my head but not all.

So, I decided to purchase the “Goal Based Portfolio Management” course hoping to get more answers. Purchased and watched all of them. I got almost all the answers about personal finance and portfolio management that were bothering me.

Then I felt that it was possible to get into auto mode. I just need to buy the “Robo Advisory Tool” to reduce my effort. Bought and almost sorted all the goals.

Then I felt that the “MF goal tracker and stock portfolio Tracker” is also a great tool to visualize things. Bought it and started using it.

I almost sorted everything now. Was a little confused about some little things. I wanted to use my NSC amount for my Child’s Education Planning and Retirement Planning. But I was confused about how to do it and how to use it in the calculator. So I wanted to have a fruitful discussion with a fee-only advisor.

I joined the AIFW Facebook group after getting the information from Freefincal. Started to follow and it’s a great platform, members are so helpful, honest, and knowledgeable. There I found Chandan Singh Padiyar Sir (you can get details from the fee-only advisor post of Pattu sir) to be one of the most active guys and an honest guy.

Tried to arrange a meeting with him, I didn’t want a holistic financial plan but to discuss my thought process about what I was doing, and if I was committing a serious mistake. I don’t bother about small mistakes, I will learn from them and will rectify things as per my capabilities.

Luckily I got a chance to fix a meeting with him and he was so generous to listen to me, my problem, and my confusion, and guided me in a simple way which was more important. I was confident about what I was doing, but the meeting worked as a catalyst for me to be a DIY Investor.

Now I was in the driver’s seat and I knew where to go, when to go, and as I had a road map I knew how to go. So, my investment journey is in auto-pilot mode now. 

I provided my detailed goal-based investment portfolio review in the next article. You can access it in the link given below:

In this journey, I realized

  • I was lucky (mainly because I didn’t have to take any loan that too for my home. My father did that for me, I just had to spend some amount that was in my capacity).
  • I was lucky to get the right thing at the right time. Like when I needed to know the basics of personal finance I took the course of Investyadhna. When I needed a mature platform I found Freefincal. When I need support, my wife is always there. When I needed to consult an honest advisor I got them and had a discussion free of cost.
  • I was disciplined
  • I was always hungry to learn something, something new.
  • So, you need knowledge, hunger to learn something new, discipline, and luck to get on the right track. 
  • But the most important is discipline – about 90%

Read the Author’s journey here:

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