Over the years, I’ve invested in more than 100 IPOs, with around 80% of them yielding positive outcomes. My first IPO investment was in TCS, and since its listing, the wealth from that investment has grown 35 times. My financial goal is to build a corpus of ₹5 to ₹7 crores, of which I’ve already achieved 80%. I’ve relied on three major sources of passive income: rental income, interest from savings and fixed deposits, and dividend income, which collectively cover my monthly expenses of ₹70,000 to ₹80,000.
Professional Journey and Financial Growth
Early Career and Salary Hikes
Although I’ve thought about early retirement, I don’t plan to retire anytime soon. I enjoy my work in the tech industry and plan to continue for another four to five years. My professional journey began with Tech Mahindra, earning ₹10,000 per month. Over the years, I switched jobs strategically, ensuring salary hikes of 50% to 100% with each move, eventually working in roles that offered salaries upwards of ₹30 lakhs per annum.
Value of Frugality and Investing
Growing up in a middle-class family taught me the value of frugality and judicious spending. This foundation evolved over two decades as my financial status improved, allowing me to focus on investing. My interest in investing began during college, inspired by a Gujarati friend whose family frequently discussed the stock market. I opened a demat account after my first salary in 2003 and started investing in IPOs, with TCS being my first.
Financial Goals and Investment Strategies
Bucket Strategy for Financial Goals
My financial goals have matured over time. Currently, I follow a bucket strategy, allocating funds for specific purposes like my child’s higher education and retirement planning. For my child’s education, I aimed for ₹60 lakhs, considering tuition fees of ₹30 lakhs per year for two years in the U.S., adjusted for inflation. I began SIPs with ₹10,000 per month and increased contributions yearly by 20-25%, using bonuses to boost the corpus. This journey has spanned over 15 years.
Diversified Portfolio
My portfolio is diversified with 35% in real estate, 27% in stocks and mutual funds, 11% in retiral schemes like PPF and EPF, 10% in fixed deposits, and the remainder in savings accounts. My long-term goal is to create generational wealth—not just financial assets but also skills and knowledge for my children, enabling them to start their journeys with confidence.
Lessons Learned from Investments
Successes and Mistakes
Reflecting on my investments, I’ve learned from mistakes, such as investing in the Reliance Power IPO, which didn’t meet expectations, and Jet Airways, which went bankrupt. Choosing the right IPOs is crucial, focusing on factors like the company’s pricing power, competition, financial health, and founder involvement. For due diligence, I rely on red herring prospectuses and publicly available financial data.
Importance of Financial Planning
Financial planning is essential, especially for those in the tech industry, where job security isn’t guaranteed. Engineers should prioritize planning to avoid financial surprises during uncertain times. If I could relive the past 20 years, I’d allocate larger amounts to investments earlier, as this would significantly impact the final corpus.
Conclusion
My IPO investment journey has been both rewarding and educational. From initial investments in TCS to building a substantial corpus, the lessons learned along the way have shaped my financial strategies. If you enjoyed this story and know someone with an interesting financial journey to share, please fill out the form in the pinned comment, and we’ll reach out.
Frequently Asked Questions (FAQs)
Q: How did you start investing in IPOs? A: I started investing in IPOs after my first salary in 2003, inspired by a friend whose family frequently discussed the stock market. My first investment was in TCS.
Q: What is a bucket strategy in financial planning? A: A bucket strategy involves allocating funds for specific purposes, such as higher education or retirement, to ensure that financial goals are met systematically.
Q: How important is diversification in a portfolio? A: Diversification is crucial as it spreads risk across different assets, reducing the impact of any single investment’s poor performance on the overall portfolio.
Q: What are the key factors to consider when choosing an IPO? A: Important factors include the company’s pricing power, competition, financial health, and founder involvement. Due diligence is critical, relying on red herring prospectuses and publicly available financial data.
Q: How can financial planning help in the tech industry? A: Financial planning is essential in the tech industry due to job insecurity. It helps individuals avoid financial surprises during uncertain times and ensures long-term financial stability.