Here’s the story of Amit Kumar, an Indian Army Major, and a member of the 1% Club. He attended Sharan’s Personal Finance Masterclass in March 2023 and joined the club in November 2023. After reading our community stories on LinkedIn, Major Amit reached out to the 1% Club team and happily shared that his mutual fund portfolio has given 44% returns. From his career decision to his financial plans, he also shared interesting details of his financial journey since starting his career. Read further to know how he is managing his finances, despite the heavy responsibilities he carries as a proud member of the Indian Army.
Why did you join the Indian Army?
I belong to a small place called Bokaro in Jharkhand where people mostly prepare for engineering and medical exams. However, I always thought of becoming a pilot and donning the uniform. I had a school friend who was from Sainik School. He told me there is a way wherein all this could be done free of cost and that’s NDA. So, I prepared for the exam and qualified but was declared medically unfit in the first attempt. But by this time, I had made my choice that I would do it again and appeared for the exam as well as went through the interview again but this time, I was declared medically unfit for the Air Force and I got Army. I actually never knew what my life had in store for the future but I was always fond of taking risks and had confidence that at least I could bet on myself for every step that I take. It’s been seven years now and life has been very different and I still love it.
What motivated you to start saving and investing?
I always had a wish for luxury, which I could never afford. I always wanted my first car to be an Audi. One of my training officers in NDA had an Audi A3 and it inspired me. I told myself that my first car needed to be an Audi. After getting commissioned in 2017, my basic pay started at Rs 56,100, and in-hand pay was somewhere between Rs 80,000-90,000 after all the taxes and everything, which was too much for a 22-year-old. So, I started to support my family and at the same time became a spendthrift. There was a bad habit of impulse buying. I even impulse-bought two bikes (one for me and one for my father). However, after my marriage in 2020, I realised that things are different now and I really need to have something called savings because I had already taken out money from my provident fund as well as a personal loan to get married.
What were the initial steps you took and mistakes you made?
Initially, when I started investing I did not know anything. One of my seniors helped me make a profile on Zerodha and taught me about how to buy and sell stocks. I never knew any other form of investment other than stocks and provident funds. I used to watch YouTube videos and invest in stocks and then sell those that became red or would book too early if they were in the green. I wanted to learn about those things because they came out to be like easy money and I understood the mechanics behind them.
I subsequently learned a few things on my own about Mutual Funds and US equities and deposited some money in them. However, whenever I needed some extra money for some requirement I would sell them because I never knew the effect of compounding or long-term investing. I was always in it for the short term.
How is your portfolio performing?
I believe that in investments, boring is exciting. It is not adventurous to review your portfolio after every market news. Rather, one should sit and relax and be in the market for the long term. Due to my profession, I am not able to monitor my portfolio frequently and hence, I am not stressed by it. I just continue with SIP and my PF gets automatically deducted. And yet, my portfolio is up 44%.
Asset allocation: Debt – 30%, Equity (MF and shares) – 40%, Gold (only SGB) – 20% US- 10%
Debt is my PF savings, which I have been earning for the last 7 years. However, I withdraw from it whenever I feel it is weighing the portfolio down and move it to Equity. I don’t have an emergency fund but since I am in Government service, I can withdraw in PF in just two days, so I keep that money in Debt.
Monthly SIP: I started with Rs 1500 three to four years back but stopped it and then started with Rs 5,000 last year with a 10% step-up annually. I also do lump sum investments if I get an extra allowance.
What are your financial goals?
My short-term goal is to save money to finance my MBA journey post my GMAT as well as save enough to switch my profession. Long term is to start my own business and build capital for the same.
Did you plan your Insurance as well?
I have Rs 2 crore worth of life insurance policies. I have been provided one from the Army and the second I have purchased on my own. I pay a huge amount towards them as a lot of companies don’t cover my professional hazards such as war, riots, or adventure activities. I came to know about this when I went through the fine print of the policies.
I also have a joint policy for myself and my wife of Rs 15 lakh over and above the medical facilities provided by the Military Hospital which are limitless but are restricted to locations.
What’s the investment strategy that you follow?
I would say it was some luck and some knowledge. After learning to analyse Mutual Funds from the 1% Club modules, I invested in index funds as well as some sector-based funds. I knew the Government was rooting for Make in India and increasing domestic defence production; so I invested in HDFC Defence Fund. Apart from this, I looked at the rolling returns of different fund houses as taught in the modules and filtered them according to my requirements and I selected my MF house.
I also looked at my portfolio using the financial planner tool and I realised my stock investment was more in large-cap funds because of my equity holdings so I rebalanced to include more small and midcaps. And finally, this bull run is also helping to push the portfolio forward.
Apart from SIP, which other investment has given you good returns?
US equities are a good option. As they provide double benefits. Everyone knows that the Indian currency will devalue against the US dollar as US debt continuously increases and it prints more and more money to fulfil its needs. So, you earn from money devaluation as well as an increase in share price.
Also Read: How This ICICI Home Finance Employee is Managing His Own Money to Retire in 40s!
What did you learn from 1% Club?
I joined the 1% club in Nov 2023. I calculated the FIRE number and found it to be quite high for my requirement so I planned and increased my savings. It can’t be all at once but bit by bit. I would say I learned everything about investing from the 1% club. But the issue is not learning but implementing. It takes dedication and perseverance to continue with what you started. I also did the same thing. Small improvements like reading your monthly bank statement as well as not being worried by market sentiments are actually important for investing.
Lastly…
Major Amit says “After joining the army, you might find it exhausting to manage your finances on your own, but it’s very important because financial freedom can ensure your family’s well-being.”
Disclaimer: The above content is based on the information provided by Amit Kumar. The 1% News doesn’t independently verify non-public data reported by interviewees.
