Equity Investing as a full time career?


(Nikhil Rodrigues) #457

Theoretically, this calculation is fine. Practically there are several things that will change it dramatically.

  1. Expenses of a bachelor to expenses as a family don’t grow at flat rate. They multiply. Plus lifestyle inflation is more like 10-12% than 5-6%. This includes buying better cars, better vacations, bigger house etc.
  2. We should assume 15% returns for MF. Past 20 years will not be repeated in next 20.

With focus the financial independence can be achieved. But I would say 90% people lack the focus and consistency needed.


(Shailesh) #458

Right you hit the nail . 90% lack focus and discipline

But what I have given is practical . I was able to do it faster as my compensation grew > 20% instead of 10% with series of promotion that led to step up increase in incomes besides 10% annual rises …

Expenses never went up higher than 5% annually as one moves up the corporate ladder , lot of expenses are taken care through corporate perks … housing , car / driver / club expenses / telephone etc …


#459

@kb_snn I understand the calculation that you have mentioned, which emphasises on having your annual expenses fuelled by the dividend income from your portfolio.
Based on this calculation you would need 100x your annual expenses (including margin of safety). So if my annual expenses are 12 lacs (1 lac per month), then I will need 12 crores to have 1-2% dividend to fuel my lifestyle and expenses.

I have another naive question.
On this journey to be a full-time investor and also be financially independent, wouldn’t it be prudent to have 2 Cr of this portfolio into lifetime annuity options like LIC Jeevan Akshay for example which will give sureshot 14 Lacs per annum (7% approx.). I understand that this will not beat inflation over next 30 years. But this will make sure that you do not panic in situations of market crash and go into poverty mindset. Rest of the 10 Cr and dividends from it will take care of the additional surplus and also help beat inflation in the coming years.

I am sure people will be using some sort of steady income like house rent or annuity than to completely rely on dividend income with enough margin of safety. What are the other options?


(Shailesh) #460

I would not recommend LIC policy for investments , instead you can go for tax free bonds or debt funds ( which after 3 years are tax efficient )

Also once you have dividend income from stable diversified portfolio > 1.2 times your annual expenses , you need not worry about market crashes as dividend income from good companies keeps on increasing with inflation irrespective of stock market prices ( look at dividend per share for ITC , HUL , Infosys , Asian paints for last 15 - 20 years )


(Dinesh Sairam) #461

This thread is not my cup of tea (At least not right now). But I read this old interview by Seth Klarman and thought it was amazing.

Klarman Barrons 1991 - Value Hunter.pdf (1.1 MB)

Apologies if already posted here.