Equity Investing as a full time career?

[nikrod12]

All this is fine on paper and excel. Things don’t work like this in real world. No one who has done 25-30% CAGR till now had planned for it. It can happen or not happen. You don’t find multi baggers. They happen out of your portfolio. Also most of the returns happen in short burst, while there are few or many periods of negative and flat returns.

If one relies only on equity portfolio for day to day expenses, sequence of returns risk needs to be seriously studied and considered. An example is 1966 retirement cohort based on US S&P 500. From 1966 to 1982, US inflation soared, S&P returns kept up with inflation during this period. There was roaring bull market after 1982. Still, 1966 retirees went out of money before 30 years. All this due to sequence of bad returns.

I just want to highlight that we may focus and put in all the efforts we want. Markets have their own mind and might not reward us when we want it to. So we need to think and plan well before leaving job for full time investing.

[Deven]

Interesting discussion, sharing My Perspective on Financial Independence and Full time Investing:

The World Is Poorer Than We Think:
If you have a net worth of USD 1 million (approx. ₹8.5 crore), you’re already among the top ~1% globally in terms of wealth. This includes all assets—real estate, stocks, gold, savings—minus any liabilities. On social media, you’ll often see people suggesting ₹8-10 crore in liquid assets as a prerequisite for FIRE. That’s an unrealistic benchmark for most people.

Focus on What You Can Control:
There are limits to how much one can earn—factors like luck, opportunities, and education play a major role. But what you can control is your spending and saving habits. That’s where true financial discipline lies.

Reverse Mortgage Is a Real Option:
Remember there is concept call reverse mortgage, is worth exploring. It’s not commonly discussed, but it can be a useful financial tool.

Manage Major Expenses:
In India, two major expenses often derail financial plans—children’s education and their marriage.

Education: In India - collages, except few, most are mediocre. Mean to say, e.g. engineering if your children are not exceptional and can’t crack IIT, most B,C,D,F grade collages are same. Spend wisely.

Marriage: No need to elaborate—it’s a cultural expectation that often comes with hefty spending. If I manage to stay frugal here, I’ll report back!

If you’re considering going full-time into investing, two things are essential—passion and a reasonable amount of liquidity—and in that order. Both are personal and subjective. You don’t need a massive portfolio to take the leap if your mindset and financial buffer are aligned.

Life is short and unpredictable—do what you love.

[Mudit.Kushalvardhan]

@Deven , Reverse Mortgage is not a very good option for monthly pension.
The upper capping is at 50,000 monthly, which is a peanut in metro cities. Maximum reverse mortage loan is 1 cr one can take on any value of property. To get 1 crore reverse mortgage loan, the market value of property should be around 1.6 cr as only 60% of value is given as loan. Age criteria is 60, so if a retired person takes reverse mortgage at his age 60 of amount 1cr on his property value of 1.6 cr, he will start getting monthly amount of 50,000. Suppose he dies at age 75, after 15 years, he will get total cash payout of 50,000×12×15 = 90 lakhs in total. If Future value of this annuity is calculated at interest rate of 12% ( 2%-3% higher interest rate than normal home loan) , the amount of outstanding loan becomes 1.75 cr after 15 years. So when he dies at age 75, his heirs will hae option to pay off 1.75 cr reverse mortgage loan or surrender the property to bank. Now for a cash payout of 90 lakhs, giving out a property worth 1.75 ( loan amount, property value will be higher) doesnt make practical sense. Instead, moving into smaller house and selling this flat of 1.6 cr at age 60 ,makes more sense. Reverse mortgage is immensely beneficial to bankers and a losing deal ( i would call it a robbery) for customers.

[Ayush_Singh]

Reverse mortgage is immensely beneficial to bankers

True, but it’s obvious because if it was opposite it would become kind of infinite money glitch where everyone would take it and then buy properties and do it again.

Reverse Mortgage is not a very good option for monthly pension

It is very good for people with no heir or who don’t want to pass to there heir, because what would do with the property after you die.
eg: I have 2cr property and with no heir, I would gladly take this deal as it will let me live into my current house and also provide monthly day to day expanse.
So the target audience would not be all but it’s definitely worth it for some.

Maximum reverse mortage loan is 1 cr one can take on any value of property.

It shows 2 cr for metro and 1.5cr for non metro in SBI

[kb_snn]

What is meaning of full time career ??
Career is not job : A career represents a long-term commitment to a particular field of work, involving professional growth, learning, and the pursuit of fulfillment through work.

Equity Investing is not simple . it takes years of full-time effort to understand why / how of sectors and their impact on stock prices . What is right diversification and how does one generate alpha when regulation , interest rate and economy shifts changes . It takes ages to understand . For that you need to have both real life business experience to develop gut feeling and craving to study to understand theory of why things happen .. This all reduces judgement error but does not eliminate them

Long term full-time equity investors get their rent from part time investors who float in and out of markets and from benchmark huggers who want to appear to be right / or please their investors / followers

Yes one needs capital to do it .. which I have highlighted earlier .. Dividend Income should be 1.2X your annual expense .. But this is small part , the bigger part is you should enjoy studying and researching companies and sectors and proven right when you put your own money on line behind your decisions ..

[abhijain]

In order to earn passive income and to look at “investing as a full time career”, I have been searching for some low risk (of course it can not be zero risk) and slightly safer 10% pre-tax returns investments. Want to put money here so that my annual expenses can be generated from here while the equity component goes unhindered. The investment vehicles that I thought of are as follows. Since my annual expenses are in the range of 20 lacs, thus I have considered INR 2 Cr for allocation. Needless to say, once out of the corporate, the taxation can be managed at 10% if these investments are distributed through husband and wife accounts or even through HUF vehicle(need to read more on this though). Still 9% post tax returns is possible which can take care of expenses fully.
Well, 6% Inflation has not been considered into future year expenses. But then somehow it will be managed through the excess returns generated here and through equity allocation.
I am still working. Once out, probably allocate more to Indigrid and REITs. Right now, allocation is less because dividend payout is added into income, thus taxation is in highest bracket.
Please look at the investment vehicles and let me know your constructive feedback/thoughts.
(please look at the angle of 10% returns and not at other aspects like emergency fund, loan free house etc etc.). The first table is allocation strategy and second one is bucketing the expenses over 5 years and allocate into these vehicles accordingly given their nature of beta.

[ChaitanyaC]

It is not about allocation and expected return. It is about managing expenses with the cash flows. Consistent cash flows are required. Anything related to market or gold are not consistent, we may have a bumper return one year, with no return the next year, and some loss the next year. Return from debt is consistent. Here too, there could be a minor loss with debt funds.

Equity unless managed personally cannot give consistent returns. Mutual funds managed by conservative managers can also yield negative returns if the market environment is bad.

Achieving a required corpus with time is one thing, and expected regular cash flows is another. One requires time, one requires active management.

[a_anurag79]

you should look at NCDs as an option. There less risky to high risk NCDs with returns anywhere starting from 8.5% to 11-12%. You can have right mix to generate 10% return.

[abhijain]

Please look at the table 2- bucket wise strategy. Hope it answers your question on asymmetrical returns.

[abhijain]

This is risky IMO. Remember Franklin saga of 2018-19, ILFS. And all of these papers there were north of A+
I might put some but not more than 5-10% of this corpus

[amangoklani]

Life as a 12-Month Full-Time Investor: Beta Test Phase

Recently, I was laid off not once but twice over a span of 18 months. During this time, I got a chance to beta test my life as a full-time investor—a lifestyle I’ve long wanted to live. While one year is a short span to judge how well I’ve managed to live off my portfolio, I truly believe this period has acted as a beta test for the life I want. It’s helped prime me for when I get to do this for real, long-term.

I’m not gonna lie, it stung when it happened. But in hindsight, it was probably the push I needed. If I hadn’t spent the last ~15+ years deep-diving into personal finance and investing, I don’t think I’d have handled it this well.

I’ve always kept my finances tight, my PF well-structured, and more importantly—my head in the game. That helped a lot. I’ve lived off my portfolio this past year, and touchwood, it’s worked.

A lot of credit goes to the books that shaped how I think. The ones that taught me the basics and then some—One Up on Wall Street (Peter Lynch), Common Stocks and Uncommon Profits (Philip Fisher), Coffee Can Investing (Saurabh Mukherjea), 100 Baggers (Christopher Mayer), and of course The 5 Rules for Successful Stock Investing (Pat Dorsey). I also really liked Morningstar Guide to Mutual Funds by Christine Benz and yeah, Rich Dad Poor Dad by Kiyosaki—say what you want, but that book did set the tone early on.

But being a full-time investor is a bit different. That’s where A Simple Path to Wealth (JL Collins) and How to Retire (Christine Benz) really helped. They talk about financial independence in a no-nonsense way. The kind of stuff we should be taught in school, but aren’t.

I’ve been following the 4% withdrawal rule quite closely. So let’s say you’ve got $100,000 invested. It grows at ~10% annually, inflation eats away ~5%, and taxes take another 10%. Even with that, the math checks out—you can keep withdrawing 4% every year and your portfolio just… keeps going.

Yes, you heard that right.
It can last indefinitely.
Let that sink in.

It blew my mind when I first understood it. And it still does. This idea that you don’t have to trade time for money forever—that if you stay disciplined, patient, and humble, your money can work for you. Forever.

“It is not the man who has too little, but the man who craves more, that is poor.” — Seneca

I’d like to think being a patient investor is my tiny version of living that truth.

While I continue to live like a full-time investor as I write this, like any middle-class person, I’m still on the lookout for a job or opportunity that truly excites me.

[sumit680]

Here, Inflation rates can be higher. We should cater for personal inflation rate which may be actually 10-15% p.a depending upon life style changes

[amangoklani]

Yes, sir. Agreed. Lifestyle inflation, medical bills, cost of prescription medicines can really grow year on year. I’m keeping a check on my expenses year on year to make sure they don’t go out of whack. As I said, it has only been a year since I’ve been living of my pf. And I’ll keep checking to see how my expenses grow year on year - hoping life doesn’t throw any curveballs.

Also figuring out how I can establish other sources of income. Be it by getting another job or figuring out other ways to make money.

But irrespective, keeping a check on expenses and living within my means is what I’m aiming for. Thankfully, I don’t have to worry about rent or paying off any loans (I’m debt free). These two things really help my case.

The simple thumb rule is to be within 4% of withdrawal rates of my overall pf. I’ve also created various buckets within my pf which helps. I will expand upon this in my next post.

[MomentumStocks]

@sumit680

Here, Inflation rates can be higher. We should cater for personal inflation rate which may be actually 10-15% p.a depending upon life style changes

The 4% rule works in high and low inflation. Actually during high inflation stock prices move very high as the replacement cost is high. Your 4% will cover the higher cost.

Only time stock prices don’t move in tandem with inflation is when the government tries to increase interest rates to check inflation

[kb_snn]

Best option is to built Quasi Bond ie Growth Bond Portfolio over period of time ..

For First few years Arbitrage funds are better / more tax efficient option

Along side try to buy Growth dividend stocks when they are down . The dividend grows over time and gives in > 10% yield over matter 4/5 years since period of investment + asset price appreciation also is positive benefits ..

You should always have dividend income > 1.2 times of annual expenses .
Good dividend stocks increase their dividends > inflation rate - they are better than Bonds

[amangoklani]

More thoughts on my beta test phase: What’s Helping Me Sleep at Night

Continuing on with my earlier post. While the 4% rule is an amazing starting point. Something easy to wrap your head around. I’ve realised that life never works in a straight line just like investing. It has its ups and downs and some really serious curve balls that it throws at you.

Keeping that in mind, along with the 4% rule, I’ve also started following the bucket strategy that Christine Benz advocates about in her wonderfully written Morningstar articles.

But after a year of actually living off my investments, I’ve realised — real life needs more than just a formula. Sometimes the markets are a mess. Sometimes you’re a mess. Sometimes the world’s a mess (this period has seen low growth and layoffs around the world, a trade war and multiple wars around the world including the brief one we had with Pakistan). And sometimes, you just want to take money out without overthinking it. She’s written a ton about it and it just… made sense to me.

Here’s how I’ve been doing it. Nothing too fancy:

Bucket 1: Just cash. About a year’s worth of expenses. Sits in a boring old flexi account tied to an FD. This is the peace-of-mind bucket. It takes care of all the monthly bills for essentials and some lifestyle related expenses (movies, coffee, a nice meal, few drinks, subscriptions, small vacations in India etc.) — it all comes from here. I don’t even look at the market for this stuff.

Bucket 2: Short-term debt stuff. Locked in long term FDs, conservative hybrid funds, EPF etc. Slightly better returns than bucket, still low risk as Bucket 1. Covers about 3-4 years of expenses.

I top up Bucket 1 from here when it starts running low. Usually once a year. I first start with the interest earned in the previous year before dipping into the principal saved.

Bucket 3: My equity bucket. This includes my MFs and about 10-12 stocks that I don’t plan to sell unless I really have to or if the story has run out or not run as expected. This one’s for the long haul. Ideally, I leave it untouched and just let it do its thing.

Bucket 4: Emergency medical fund. This one’s a small-ish chunk, kept separate locked away as a FD. Haven’t had to touch it yet (thankfully), but I like knowing it’s there. Because yeah, God has made us fragile, and hospitals are expensive. It also helps knowing this small fund will keep my pf protected (to a certain extent) if something goes wrong.

The central idea is that as and when bucket #3 grows in size due to the power of equities and its compounding nature, I’ll rebalance by adding to the other buckets and keep this system going. Tweak as needed and see how it all flows. When I layer all this with the 4% rule, the portfolio keeps going.

So yeah, it’s not some genius system. Effectively following what Christine Benz talks about. But it’s helped me feel slightly more in control.

The real idea here though? This whole approach — the 4% rule, the buckets etc — it’s not about being rich and leading a lavish lifestyle. It’s about not worrying and living within one’s means. About knowing that your money can work for you while you go live your life (and I’ve been living mine in peace after a long long time - the real silver lining of losing two jobs has been this, feeling liberated).

To quote Seneca again, “We suffer more often in imagination than in reality.” These buckets, they keep my imagination and fears in check.

Anyways, I’ll keep doing this till I find my next paid gig. And with anything to do with personal finance and investing, I’ll keep checking my pf for the returns it generates and more importantly I’ll keep a tab on my expenses as that is really the only thing that is in my control.

So, I’ll continue testing, tweaking and learning in this fantastic and uncertain journey just like our lives

[bijo_scaria]

Good perspective – sharing my thoughts.

When we move into full-time investing, we tend to read more, get exposed to a wider range of views, and start seeing many new perspectives on companies. This sometimes leads to a tendency to shorten our holding periods — from long-term to medium or even short-term — as we get influenced by the constant flow of information.

Another common reason people switch to full-time investing is due to a mistaken belief that only full-time investors can make real money. But in my view, even 1 or 2 solid ideas are more than enough if you’re willing to hold them for 10 to 20 years.

My perspective is slightly different. I feel many lack focus the impact of taxes, brokerage, and other costs on our real CAGR.

Again, I’m backed by data for shifting holding period and impact on actual returns—

it shows that the average holding period, which was around 8 years about 30 years ago, has now dropped to just 6 months.

I am attaching a rough calculation.

Let’s take a simple example to understand how holding period affects real returns:

• You invest ₹10 lakhs
• Generate 20% CAGR
• Brokerage: 1.5% (combined for buying and selling)
• Tax: 20% STCG, 12.5% LTCG

Now see the difference over 30 years depending on your holding period:

Holding period: 1 year

• Frequent buying/selling
• Final value: ₹5.8 crore
• Real CAGR: 14.5%

Holding period: 10 years

• Moderate churn
• Real CAGR: 18.5%

Holding period: 30 years (buy & hold)

• Minimal churn, long-term compounding
• Real CAGR: 19.4%

— my rough caluations
CAGR and Realised CAGR.xlsx (17.7 KB)

My views (May not be directly related to this thread but still:
Brokerage and taxes may look small, but over time they can significantly reduce your real returns. Longer holding periods help you retain more of your gains and reduce leakages.

May be this reason buffet said
“Success in investing doesn’t correlate with IQ… What you need is the temperament to control the urges that get other people into trouble.”

"If you have a 160 IQ, sell 30 points to someone else — you won’t need it.”

Regards

CA bijo (Just my views)

I believe this is also one of the key reasons why nearly 60% of fund managers fail to beat the index.
The more activity you do — frequent buying, selling, and portfolio churn — the more your real returns get eaten up by taxes, brokerage, and other transaction costs.
In many cases, it’s the government and brokerage firms that end up making more money than the actual investors.

[Vineet_Bhatia]

Have been a full time investor since past 5 years now, below things have worked really well for me

1. asset diversification: Rental Real estate -20%, Gold - 5%, Debt/PPF/FD - 35%, Equities - 45%
2. rentals, interest and option writing on equity portfolio takes care of monthly expenses and i am able to save over and above that - which goes into debt/gold for future use (Gold/PPF/SSY is ritual in family every year to be bought for kids)
3. havent touched or taken out a single penny from my equity PF - Debt portion has gone up significantly - 5 years back - equity was 100% - took out 25% and invested in Real estate, remaining 75% - i utilized 20% in Gilt fund, all of this led to major accumulation in debt/PPF and gold side of the assets every year.
4. for the time being - in no mood to change any allocation unless i get very depressed valuations in equity.

full time investing is a very subjective and case to case base method - no individuals are same.

my all medical expenses are covered through my Wifes govt job
already have a term insurance worth equal to my equity portfolio (if my folio goes 3x from here in next 10 years - ill dicontinue term inusrance too) though my insurance premuims are meagre - 12000 per crore (took it 7-8 years back on full period payment term annually) these prices are not available today.

kids education - marriage - to be covered with PPF, SSY and GOLD buying every year.

hopefully my GILT investment also plays out well - as it has given me good CAGR since past 2 years (9-10%)

will update if i change any allocations

[Investor_No_1]

@amangoklani

Bucket 4: Emergency medical fund.

Thanks for sharing your wisdom and experience.
what are your views on medical insurance as part of emergency? Have you opted for any medical or term insurance and your reason for that?

@Vineet_Bhatia

my all medical expenses are covered through my Wifes govt job

Thats good. Had it not been the case, would you have opted for medical insurance?

I see you have taken term insurance. With your decent equity and real estate portfolio (also wife in stable gov job), is term insurance still needed? Would be good to lnow your thoughts.

[Dr_Manoj]

A very good post,it attracts a lot. But,there is one real and extremely big risk,to repeat extremely big risk. If something goes wrong like wrong selection,unexpected event inside/outside the company,then the capital can get eroded, time obviously lost. In case of short term holding despite the brokerage and taxation, there will be return even smaller.So,long term holding holds good for mutual fund or etf ,but for stock it’s really very risky.If one makes a basket of stocks,then return may be like etf or mutual fund.The real money is in high level concentration and very very long holding period,but very difficult to succeed due to these reasons.