Portfolio Audit 2023: Annual Review of SIR’s Portfolio

I evaluate the performance of my ‘boring’ portfolio each year. This is the 2nd time I am publishing it publicly for more transparency. I already post my monthly SIPs and stock buys on SIR’s Telegram (@InvestRepeat). I am publishing this portfolio audit so that my son/daughter can read it when they’re capable of reading and can learn from my experiences, successes and mistakes. These audits also provide a sense of accountability for myself and help me stay away from FOMO.

I am a DIY investor who loves to keep his portfolio as simple & as boring as possible. If you’re reading this in the hope of getting the next best trading tip or next best dog coin which will 100X your portfolio – you’ll be disappointed. Anyway, I divide my entire portfolio into ‘Risk Fund’ and ‘Safe Fund’. In this audit, I will show you my current allocation and my preferred allocation. By preferred allocation, I mean this is something I want to achieve in 2024.

What is my Safe Fund?
NPS
Cash
Liquid Funds
Gold or Silver
Arbitrage Fund
Savings Bank Account
Provident Fund (EPF/PPF)

What is my Risk Fund?
Stocks
Crypto
Mutual Funds

Let’s talk about my Safe Fund

Currently, I have 49.5% of my total net worth in safe fund. My preferred allocation is 27%. This high difference of current (49.5%) and preferred (27%) is due to playing it too ‘safe’. I went too conservative as markets went up extremely quickly & I thought it might correct. I didn’t stop my monthly SIPs or try to time the market but I could have deployed more lumpsums which I didn’t. I would say I didn’t miss out on the ‘Risk Fund’ rally but I could have been invested more.

What did I learn?
Stick to your overall preferred allocation even when markets are irrational.
What I am doing to fix it?
Last few months of 2023, I have already scaled up my lumpsums in Risk Fund to bring down my Safe Fund allocation. Yes, markets are currently at an all-time high (NIFTY50 at 21665.80 at the time of writing) and I am fine to go red in my recent lumpsums. With my SIPs and increasing income, these drops will level out in long term.

What changed in 2023:

Due to taxation changes, debt funds are now taxed at personal tax rate. I used to store my Emergency Fund in Liquid Mutual Funds but as I fall in the highest tax bracket I will be taxed at 30%. I invest 5% of my monthly income in Emergency Fund so that it doesn’t loose value due to inflation & fiat money printing. For last 3 months, stopped investing in Liquid Funds & stored that amount in Savings Account temporarily. I am learning about Arbitrage Funds to store this for the long term.

Also stopped investing in Gold or Silver ETFs, as those are also considered debt funds and have the same taxation issue. For gold & silver allocation I am investing in – Sovereign Gold Bonds (Fake Gold) and Physical Gold/Silver (Real Gold)

Let’s talk about my Risk Fund

Currently, I have 50.5% of my total net worth in risk fund. My preferred allocation is 73%. This high difference is for the same reason of playing it too conservatively, as discussed above.

What changed in 2023:

Overseas funds like Motilal Oswal S&P 500 Index Fund are also treated as debt funds. I did a rough calculation and found out that for someone in 30% tax bracket like me, any overseas fund have to give minimum 14.5% pre-tax to outperform Nifty 50 post-tax. The only international fund that has done that is Nasdaq 100 index fund. So for overseas exposure am only investing in Navi Nasdaq 100 fund FoF.

After the overhaul of the tax regimes, for me New Tax Regime is now more attractive. So I have stopped investing in Parag Parikh ELSS Tax Saver Fund. And to declutter my portfolio more, I have stopped investing in Motilal Oswal Nifty Smallcap 250 Index Fund. Only investing in Quant Smallcap active fund. Earlier used to invest in both. Didn’t sell anything, but not investing more. This is mainly due to Small cap indices being very bad, and actively managed funds are better in this category.

Lets now look at my overall portfolio that includes both safe & risk fund,

In stocks, am still working on decluttering and will finally hold only 10 stocks. That’s why it has lowest allocation and will significantly increase in 2024. In crypto, 58.7% of my holding is Bitcoin (BTC), 14% Ethereum (ETH), 9.7% Monero (XMR) and rest is others which I use to learn the technology & get habituated with the blockchains. Now lets look at mutual funds in detail.

Summary:

In 2023, my overall portfolio went up 38.87% (including crypto) and 30.1% (excluding crypto). Below chart is my overall portfolio performance Vs Sensex Index in last 5 years. My all-time CAGR stands at 22% (excluding crypto) and with crypto its way higher but I didn’t calculate as the tool doesn’t allow. Also, CAGR is not a very good metric to track, XIRR is way better but currently the tools I use i.e Value Research and Zerodha – both doesn’t show portfolio level XIRR. Zerodha promised this feature is coming in 2024.

Finally, as I already stated – I write these for my kids so that when they’re capable of reading they can read this. Son/Daughter, this ‘advice’ is specifically for you:

• Biggest advantage you would have is to start investing as early as possible.
• Monthly SIP is way better than daily or weekly SIP.
• Keep your portfolio as simple and as boring as possible. Max 6 funds and 10 stocks, anything more means spend your weekends to check where can you reduce more.
• Invest in low-cost broad market index funds.
• Invest like a robot and as much as you can without worrying about market movements.
• Stick to your preferred allocation, time will take care of market downturns.

For others, as always please don’t take this as investment advice; am not a SEBI-registered investment advisor. You should do your own research and/or contact an RIA.

Never forget, Save Invest Repeat is our life mantra.

If you have any questions and am not available to answer, go through my X posts at @InvestRepeat. Also, you can read my private Telegram channel (Username: InvestRepeat).

Your dad,

SIR