Sharing my portfolio to trim and make it more concentrated About me:
age: 28 profession: software developer
started my investment journey nearly around end of 2017 when mid and small caps were peak.
I made a lot of mistakes initially and was buying anything by seeing the rally on any particular. Learned a lot and still learning. Have seen already good and bad phase of market and one thing I am proud of I never lost hope from market.
Initially I was in loss for almost 1.5 year on my overall portfolio and booked loss in the Jan2019 and decided few rules on myself listed down:
started buying only large cap
book loss/exit once my stock is 20% in red (if overall market is itself down to hold at that time)
to make sure stock is not performing similar to Nifty (in technical terms I think aka Beta)
Now I know these rules are not enough but still making it possible to make my hard earned money invest in right way.
I need help for trimming my portfolio and even exiting from bad ones. I can be moderate risky investor and can invest 60% of my salary for at-least 3-4 years. My goal is to get financially independent or at least try to achieve as early as possible.
Apart from this
I am also having international portfolio and pennies in crypto. (we can ignore both as of now)
Hold Elss mutual fund for tax savings part and invest in 3 Etfs as SIP ( KotakNifty, Kotak Bank Etf, Kotak Gold Etf)
capital allocation is not sufficiant as there are around 25+ scrip you hold which might not get handsome effect to your portfolio even some of your stocks become multibegger due to mis alllocation of the holding companies.
Not sure as to how you went about selecting scrips. Plus the rules of selling on 20% drawdown makes zero sense if you’re a long-term fundamentals based investor. The rules seem to be better oriented for traders, rather than someone planning for independence.
The Indian stock portfolio is high diversfied, so you’re more likely to mimic broader market returns.
The best option would be to focus on your job/business, generate good cash flows, and keep investing in index funds. You can practise investing on your own, but with small amounts until you actually become better at it.
If you are into doing in depth study on portfolio stocks , then better to stick to 10/15 max , while there is no such rule . when you go beyond 15+ allocation goes down and any bigger upside at low allocation does not impact portfolio much .
Does it make sense to have multiple portfolios, like for example:- New Tech Theme Portfolio, Electric Vehicles Theme, Large Cap theme, Small Cap theme, Loe PE theme, etc?
definitely thats my first target from upcoming year to allocate funds to my best/stable scripts and you rightly said what I am facing currently is even my some scripts are almost 2x but on portfolio return they are not affecting much
any help to narrow down to 25 will be highly appreciated
I am not that technical sound with ratios and all
I try to buy the ones which I can relate personally and also understand the business in better way.
only reason for rule of selling script getting 20% down is because in one way you can say I am still not mature enough to see loss and also my aim is only to become independence not to be next jhunjhunwala and holding the script if it goes beyond 30-40%
It might seems weird but that’s my understanding and I am aware I might loss lots of good script in this case.
Blockquote when you go beyond 15+ allocation goes down and any bigger upside at low allocation does not impact portfolio much
this is the only reason and definitely I want to trim but not make concentrated to 10-15 stocks.
Only brownie point I know drastically negative and positive upside in any script will not affect much on my portfolio.
So you think holding in the range of 25-30 scripts can still makeme achieve my goal?
Yes , your age is on your side , you have a long runway . When you have 30/35 scrips and allocation is 1/2% that doesn’t make much impact , I would only suggest to keep atleast 5% capital allocation to your highest conviction stocks.
took my first, it may not sound good but decided with removing SBI card and HDFC life
definitely there is nothing wrong in both the scripts but just comparing with others and since holding them for more than 1.5 years, they have not given much in return.
Time ahead for both the scripts may sound good business wise, but don’t want to wait more to let that play out.
So as of now I have definitely have funds since exited from them both
Any views to allocate where will be highly appreciated or to just sit on cash for now
Honest feedback - if you are having to ask others about which ones to sell and buy, you are better off staying away from direct equities. Otherwise you may end up making the mistakes you mentioned you made in 2017.
You are better off with a fund like Parag Parikh. They are flexi cap with exposure in India and US and good fund managers. They don’t have plethora of funds - hence focus on the handful they have.
I am not trying to discourage you from the markets, but it is not worth it unless you build your own process and conviction. Hope you don’t mind my frank response. All the best.
thanks @newrb for mentioning it.
sorry from my post if you feel like I blindly follow someone suggestions or advises.
It always good to have suggestions from others who are far more better and good at it.
Like you advised fund you mentioned, don’t mind please don’t advise this too to someone, you never know if fund start under performing in upcoming years that person might hunt you (on lighter note)
If this thread is related to Financial Independence as mentioned in the title, I found one youtube video explained very well about the same.
The 5 Stages of Financial Independence
Survial - 0 savings or investments, a lot of liabilities ( having a negative net worth) Solution - increase income, decrease expenses
Progress - able to save $ every month. Increased net worth. Increase in assets and decrease in liabilities
Debt free - 0 Liabilities. Free cash flow.
Growth - A lot of savings and investments. Full sized emergency fund. Possible passive income.
Freedom - Very high net worth.
I am also a software engineer and want to become Financial Independent. (Want to quit my job ) I am still learning about the FI & looking for different sources of regular income.
I am starting like you so empathize with you…few pointers…
Diversified portfolio allows you to minimize risk. However, too much diversity also can mean not concentrated earning from investment.
decide you are a long term (buy & hold) or short term investor (within 365 days or less). also calculate the churn rate that you have to give to the entities involved like your demat account service provider etc.
Large caps are always good bet so a decent % allocation can be for them!
@docaby totally agree with the points you mentioned,
gradually with increase in experience and understanding the market I have stopped adding funds to my large caps and started focusing more on mid caps.
This might sound weird and may add more volatility to PF but with patience and holding growing mid caps I think it can slightly help me achieve the goal faster.
With small caps along with profits % comes with risk, but I have noticed one thing to achieve big your either one of small cap stock or mid cap should become large cap in atleast 5 years span (lesser is better too :D)
You should be prepare for a big draw down. If market corrects, small cap will be hit hardest and mid cap somewhat lesser than small caps. I think you are chosing wrong time to enter but these are my views and I am not an expert and my views can be wrong.
) I am still learning about the FI & looking for different sources of regular income. 