Amit Upadhyaya: From Corporate Executive to Financial Independence at 46
Discover how Amit Upadhyaya, a Pune-based executive, achieved financial independence at the age of 46 through wise investments in stocks and funds.
Financial IndependenceInvestmentsStock MarketPuneFireReal Estate PuneOct 27, 2024
Upadhyaya follows a disciplined 'buy and hold' strategy, which he maximized during the COVID-19 pandemic. He withdrew ₹50 lakh from his SBI Maxgain home loan overdraft account and invested it in the stock market in March and April 2020. This investment has since tripled, helping to accelerate his journey to financial independence.
The SBI Maxgain loan had an interest rate of around 8% during the pandemic, which, after tax deductions, came to a net cost of 5.6%. This strategic use of leverage has been a key factor in his success.
Two stocks in particular have been compounding machines in Upadhyaya's portfolio TVS Motor Co. Ltd and HCL Technologies Ltd. He bought TVS stock in 2011 when it was trading at about ₹50 per share. By 25 October, the shares were trading at around ₹2,442, representing a compound annual growth rate of nearly 35%. He also invested in HCL Technologies, believing it would outperform other large-cap IT stocks.
Upadhyaya also has a significant portion of his portfolio in small-cap funds, including SBI Smallcap, HDFC Smallcap, and PPFAS Flexicap. He estimates that his overall portfolio has compounded at a rate of 19-20% over the last decade.
Currently, Upadhyaya's investment corpus is about 41 times his annual spending, excluding his primary residence. He believes that 25 times his annual spending is sufficient, but he has accumulated additional funds for his daughter's education.
Upadhyaya began his career as a software engineer and later moved to the business side of Dassault Systemes. After some disappointing experiences with mutual fund distributors in the early 2000s, he decided to conduct his own financial research and developed a 'buy and hold' strategy.
In 2008, he bought his first house for ₹37 lakh, taking advantage of a recessionary dip. He sold it for ₹75 lakh in 2015 and used the proceeds to buy a larger home, taking a ₹70 lakh loan through SBI Maxgain. During the pandemic, he used the overdraft facility to invest in the market, focusing on banks and auto ancillaries.
Despite his careful planning, Upadhyaya faces some challenges. His portfolio is heavily skewed towards equity (85%), which puts him at risk of a market crash. He also needs to be cautious with EPF withdrawals, given the issues many consumers have faced. Additionally, he lacks a robust health insurance policy and feels that life insurance is not necessary given his substantial corpus.
Upadhyaya's strategy of using home loan money to invest in equities is a high-risk move, as market returns may not always exceed the interest rate. However, he is prepared for this and keeps the loan open for future opportunities.
Retirement, for Upadhyaya, is not an idle time. He enjoys road trips, drone photography, fitness, and long-distance cycling. He also plans to explore his creative side through writing and movie-making. He aims to share his financial knowledge with others and help them achieve financial independence. Upadhyaya sees retirement as a time to pursue his passions away from the corporate grind.
Frequently Asked Questions
How did Amit Upadhyaya achieve financial independence?
Amit Upadhyaya achieved financial independence by investing wisely in stocks and mutual funds, following a 'buy and hold' strategy, and leveraging home loan overdraft facilities during the pandemic to maximize his returns.
What are the key stocks in Upadhyaya's portfolio?
The key stocks in Upadhyaya's portfolio include TVS Motor Co. Ltd and HCL Technologies Ltd, both of which have shown significant growth over the years.
What is the SBI Maxgain home loan overdraft facility?
The SBI Maxgain home loan overdraft facility allows borrowers to park excess cash in their OD account and prepay the loan whenever they want, providing flexibility for investment opportunities.
What challenges does Upadhyaya face with his portfolio?
Upadhyaya faces challenges such as a heavily equity-skewed portfolio, potential issues with EPF withdrawals, and the lack of a robust health insurance policy.
What are Upadhyaya's plans for retirement?
Upadhyaya plans to pursue his hobbies like road trips, drone photography, and fitness. He also wants to explore creative activities like writing and movie-making, and share his financial knowledge with others.
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