₹5 Cr Mutual Fund Portfolio EXPOSED! 🔥 | @Sanjay_Kathuria Secrets

Name: ₹5 Cr Mutual Fund Portfolio EXPOSED! 🔥 | @Sanjay_Kathuria Secrets
Uploaded: 2024-10-20T10:30:31.000Z
Duration: 1 h 24 min 10 s

How to Achieve Financial Independence in Mid-Career?

The Journey of Wealth Creation

A mid-career individual discusses how they began investing with a portfolio worth ₹10 crores, starting their SIP (Systematic Investment Plan) in 2008 when their salary was around ₹35,000 to ₹40,000.

The speaker emphasizes that the first crore is the hardest to achieve, requiring significant effort and sacrifices. They note that many peers still struggle for financial independence despite earning high monthly salaries.

Money doubles approximately every six years at a 12% return rate; over 30 years, this can lead to substantial wealth accumulation. The speaker shares their own SIP journey starting on September 25, 2014, which has grown significantly.

Importance of Proof and Real Experiences

The speaker criticizes those who share financial advice without proof and encourages viewers to document their investment journeys. They highlight common questions about saving money on lower incomes.

This video features Sanjay Kathuria discussing how compounding can create wealth. He reveals his portfolio for the first time as part of a masterclass on finance.

Engaging with Viewers

A request is made for viewers to subscribe and support the channel's growth after reaching a milestone of 10,000 subscribers. Viewers are encouraged to share the video with friends seeking financial success.

Reflections on Retirement

An anecdote is shared about an encounter on a local train where someone distributed sweets upon retirement after 20 years of service. Curiosity leads the speaker to question what achievements came from that long career.

Understanding Financial Freedom Challenges

The discussion shifts towards why many do not reach financial freedom despite working hard throughout life. It highlights that merely increasing income isn't enough for wealth creation.

Stories Illustrating Wealth Accumulation

Two contrasting stories are presented: one about a janitor who saved diligently and invested in passive index funds over decades amassing $8 million (approximately ₹70 crores), while another story illustrates an investment banker who lost everything during the 2008 crash due to poor money management.

Lessons from Different Financial Paths

The janitor's success demonstrates that consistent saving and investing can lead anyone—regardless of initial income—to significant wealth over time.

In contrast, the investment banker's downfall serves as a cautionary tale about failing to manage savings effectively despite having higher earnings.

Compounding Effect in Wealth Building

Life offers opportunities for disciplined saving; even small investments can grow substantially through compounding if maintained consistently over time.

Overcoming Psychological Barriers

Many individuals fail to understand or maintain discipline in investing through market fluctuations. Fear of missing out (FOMO) often leads them astray from sound investment strategies.

This structured summary captures key insights from the transcript while providing timestamps for easy reference back to specific points discussed in the video.

Understanding Wealth Creation

The Ecosystem of Wealth

The discussion emphasizes the complexity of wealth creation, highlighting that many individuals struggle to achieve financial success due to a lack of collaboration and understanding within the ecosystem.

A common misconception is that only businesspeople can accumulate wealth; however, it is also possible through employment, as evidenced by successful employees in large companies.

Case Study: Employee Success

An example is given of an employee who joined a company early on and now holds shares worth approximately 9000 crores due to the company's growth, illustrating that significant wealth can be built through employment.

The speaker stresses that becoming wealthy requires ownership rather than just earning a salary; one must either be an owner or think like one.

Financial Freedom Journey

Many individuals fail to reach financial freedom because they do not invest wisely over time. Even small investments can lead to substantial wealth if done consistently over decades.

It’s reiterated that wealth accumulation is not exclusive to entrepreneurs; employees can also build significant assets through strategic investments in their companies or public markets.

Mindset Shift Towards Ownership

To become an owner, one must adopt an owner's mindset—focusing on creating value for the company rather than merely fulfilling job duties.

Employees should seek opportunities for ownership within their organizations and understand what it means to contribute meaningfully towards company growth.

Value Creation and Execution

Owners think about how to increase revenue, reduce costs, and enhance visibility for their companies. This proactive approach differentiates them from regular employees.

The importance of contributing value before expecting rewards is emphasized; one must first give effort before receiving benefits in return.

Mid-Career Investment Strategies

A shift in focus occurs towards mid-career strategies for building wealth through investment rather than solely relying on income from jobs.

The speaker highlights personal experiences with investing over time, indicating that starting small with systematic investment plans (SIPs) can lead to significant portfolio growth.

Personal Investment Journey

The speaker reflects on their own journey of investing since 2008, starting with minimal amounts and gradually increasing contributions as they learned more about effective investment strategies.

Understanding Delayed Gratification and Wealth Creation

The Importance of Investor Education

The speaker reflects on the evolution of investor education, noting that today's resources are far superior to those available in the past. This improvement helps new investors avoid common mistakes made by earlier generations.

The Challenge of Long-Term Thinking

A mathematical analogy is presented: while addition (8 + 8 + 8 = 24) is simple, multiplication (8 * 8 * 8 = 512) is complex. This illustrates why many struggle with long-term investment strategies that require patience and foresight.

Sacrifices Required for Initial Wealth

Achieving the first crore (10 million rupees) requires significant effort and sacrifices. The timeline varies among individuals; some may achieve it in one year, while others take a decade or more due to their unwillingness to compromise.

Compromise in Financial Decisions

Compromise is essential when making financial decisions, such as resisting the urge to indulge in immediate purchases like luxury items or gadgets.

Marshmallow Experiment Insights

Referencing a famous experiment where children were given marshmallows with a choice to eat them immediately or wait for a better reward (chocolate sauce), the speaker emphasizes that those who waited tended to create greater wealth later in life.

The Reality of Income vs. Savings

Misconceptions About High Salaries

Earning a high salary does not guarantee financial security. Many individuals earning substantial amounts still struggle with savings due to lifestyle inflation and poor financial management.

Understanding Living Costs

Even with high incomes, living expenses can consume most earnings, leaving little room for savings or investments. This highlights that income alone does not equate to wealth accumulation.

Saving Skills Over Income Levels

The ability to save effectively is more crucial than simply having a high income. Individuals can be financially secure even on lower salaries if they manage their finances wisely.

The Power of Compound Interest

Building Wealth Through Patience

After achieving initial wealth, allowing investments to grow over time through compounding can significantly increase net worth without additional effort from the investor.

Doubling Investments Over Time

Money doubles approximately every six years at an annual return rate of around 12%. Over thirty years, this could lead an initial investment of one crore rupees growing into thirty-two crores through consistent investing and patience.

Investment Strategies for Future Growth

SIP Contributions and Growth Potential

Starting with systematic investment plans (SIPs), even small contributions can lead to substantial growth over time if escalated annually based on income increases.

Realistic Expectations for Returns

While aiming for returns around 12% per annum might seem optimistic today, historical averages suggest it's achievable over longer periods with disciplined investing practices.

This structured approach provides clarity on key concepts discussed within the transcript while ensuring easy navigation through timestamps linked directly back to specific points in the discussion.

Power of Compounding: A Journey to Wealth

Understanding the Growth of Investments

The speaker discusses how an initial investment can grow significantly over time, illustrating that 2 crores can become 5 crores in just six years through consistent saving and the power of compounding.

Many individuals procrastinate on investing due to doubts about future returns and immediate gratification needs, often leading them to miss out on potential wealth accumulation.

The concept of delayed gratification is emphasized; people often prefer immediate rewards (like chocolate sauce) over long-term benefits, which hinders their financial growth.

Personal Investment Journey

The speaker reveals their personal portfolio journey, showcasing a current value of 5.43 crores with an invested amount around 283 lakhs, highlighting the impact of reinvested profits from mutual funds.

They clarify that while they initially invested approximately 240 lakhs, the actual amount has more than doubled due to strategic investments and market performance.

Milestones in Investment

The first SIP (Systematic Investment Plan) was initiated on September 25, 2014, with a monthly contribution of ₹5000. This early start laid the foundation for future growth.

Over time, contributions increased; by March 2015, they reached their first lakh in investments within seven months after starting SIP contributions.

Navigating Market Fluctuations

By November 2016, the portfolio had grown to ₹10 lakhs within two years. Continuous investment during this period contributed significantly to wealth accumulation.

The speaker notes reaching ₹50 lakhs by April 2018 and reflects on how patience and consistent investing are crucial for long-term success.

Resilience During Market Crashes

In March 2020, during a market crash where portfolios dropped from ₹1.11 crores to ₹75 lakhs, the speaker emphasizes maintaining composure and continuing investments despite losses.

After five months post-crash recovery in August 2020 led back to break-even levels; subsequent investments surged as markets rebounded strongly thereafter.

Recent Growth Trends

By May 2023, the portfolio reached approximately ₹3 crores again before hitting ₹5 crores by June 2024. This rapid increase showcases the exponential effect of compounding over time.

Investment Strategies and SIP Insights

Future Projections of Investments

The speaker predicts that in 10 years, a portfolio could reach a minimum value of ₹20 crores if one stops investing now. This projection assumes no further contributions or actions are taken.

The potential for doubling the investment every decade is discussed, suggesting that the initial ₹20 crores could grow to around ₹35-40 crores over time.

Understanding SIP (Systematic Investment Plan)

A disclaimer is provided stating that specific SIP recommendations are not being made due to the overwhelming number of mutual funds available today.

The speaker emphasizes that SIP is a method of investing rather than merely depositing money; it’s likened to traditional practices like purchasing gold during festivals.

Investment Approaches Based on Goals

For long-term goals (10+ years), it's advisable to invest more in small and mid-cap funds due to their higher growth potential.

Short-term goals (5-6 years), such as buying a car or house, should focus on less volatile investments like hybrid or large-cap funds.

Risk Management in Investments

If an investment goal is short-term, it’s recommended to avoid equities and instead consider bonds or debt mutual funds for stability.

Staying invested in the market over time can yield better returns; thus, maintaining presence in markets during rallies is crucial.

Identifying Suitable Mutual Funds

To select appropriate mutual funds, look at historical performance over 5 to 10 years and check expense ratios—lower fees with higher returns are preferable.

Current tools make it easier to analyze fund performance and expenses, aiding investors in making informed decisions about where to allocate their money.

Budgeting for Investments

Emphasizing budgeting as essential before starting investments; understanding fixed vs. variable costs helps identify savings opportunities.

A personal anecdote illustrates how tracking expenses can lead individuals to save effectively by recognizing unnecessary expenditures.

This structured approach provides clarity on investment strategies while emphasizing the importance of planning and budgeting for financial success.

Understanding Fixed and Variable Expenses

Differentiating Needs and Wants

The speaker emphasizes the importance of categorizing expenses as either fixed or variable, suggesting that understanding this distinction is crucial for effective budgeting.

Variable expenses, such as petrol costs, can fluctuate month to month based on usage and circumstances (e.g., vacations).

Periodic expenses like insurance premiums should be budgeted monthly despite being paid annually; setting aside a portion each month helps manage these costs.

Nature of Expenses

It's essential to define whether an expense is a need (e.g., rent) or a want (e.g., driver’s salary), which aids in prioritizing spending.

The speaker discusses adjusting discretionary spending by evaluating wants against available budgets, encouraging mindful financial decisions.

Financial Skills for Modern Living

Addressing Lifestyle Choices

A personal anecdote illustrates how societal pressures influence spending habits, particularly among youth during festive seasons.

The speaker notes that many young people overspend to impress others, highlighting the need for awareness about financial choices.

Essential Financial Skills

The speaker identifies three critical non-financial skills necessary for managing finances effectively:

Avoiding FOMO: Stay away from the fear of missing out on trends that lead to unnecessary purchases.

Affordability Check: Focus on what you can afford rather than succumbing to peer pressure.

Long-term Planning: Maintain consistent financial goals without altering them based on market fluctuations.

Investment Mindset and Market Trends

Starting with What You Have

Emphasizes beginning investments with current resources instead of waiting for ideal conditions; starting now is better than delaying indefinitely.

Understanding Market Behavior

Discusses the common tendency to wait for favorable market conditions before investing, stressing that timing the market often leads to missed opportunities.

Sustainable Returns

Highlights the challenge of achieving sustainable returns over time; it’s important not to expect unrealistic short-term gains but rather focus on long-term growth strategies.

Financial Planning and Goal Setting

Importance of Time in Financial Goals

The speaker discusses the time frame for making a down payment on a car, suggesting that market conditions can significantly alter the duration needed to achieve financial goals. For instance, favorable markets may reduce the time from 5 years to 4 years, while poor markets could extend it to 5.5 years.

Setting Clear Financial Goals

Emphasizing the need for clear financial goals, the speaker encourages listeners to define specific targets such as planning for an expensive vacation. By setting a goal of saving a certain amount (e.g., ₹55 lakhs), individuals can create a structured savings plan over two years.

Avoiding Regret and Impulse Decisions

The discussion highlights how achieving financial goals can lead to temptations or regrets about delaying purchases (like buying a car). The speaker warns against falling into FOMO (fear of missing out) when market conditions change unexpectedly.

Establishing Personal Rules for Finance

A strong emphasis is placed on creating personal rules regarding finances. The speaker suggests that having clear guidelines—what to do and what not to do—can help maintain focus and avoid distractions in financial decision-making.

Recap of Financial Insights Shared

The session is described as an engaging masterclass on finance, particularly focusing on SIP (Systematic Investment Plan) and its potential for wealth compounding. The speaker expresses hope that viewers find value in these insights.

Future Topics and Audience Engagement

Looking ahead, the speaker invites audience suggestions for future topics, including practical advice on selecting mutual funds or planning home purchases effectively. This engagement aims to tailor content based on viewer interests.