POSTED BY January 17, 2014 10:15 am COMMENTS (12)ON
I am 38 year self-employed person. I have identified 9 sectors and have invested a total sum of INR 250000/- (Rupees Two Lac Fifty Thousand Only) for 20 Years. I have invested about 11-12% of total amount in each portfolio (sector). This is only a part of my Retirement Plan. My expectation from this plan is to get a minimum of 1.00 Crore corpus. I wanted to invest directly in share equities rather than going for Mutual Funds. Please find below my invested portfolio:
C. Chemicals & Fertilizers
-Jayant Agro Organic
D. Engineering/Capital Goods
-L & T
F. Information Technology
G. Metals & Minerals
Can it be possible to achieve my Goal from this Portfolio? At present my portfolio misses the Pharma Sector. However, I have already planned to include it. Most probably Ajanta Pharma / Sun Pharma or both.
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12 replies on this article “Investing in Stocks of 9 different Sectors as part of my Retirement Plan”
Assuming that you know the risk associated with investment in equity (and ready to bear losses), I will suggest you to put some portion in debt fund (15-20%).
Since you have planned to invest in direct stocks for your retirement portfolio, I assume that you are not a beginner in stock market, and have already spent significant time investing in stockmarket, and aware of how it behaves.
Everyone has to build his own knowledge and conviction while investing in any stock, as stock investing can not be done just by following hot tips from TV experts. So, if you don’t have enough knowledge and time to track market/economic scenario time to time, then mutual fund investment is much safer option. And on the other side if you are knowledgeable and can pick right sectors/stocks well, identify the market opportunities then direct equity investment will get you superior returns than mutual fund investment.
It’s good to see that you have chosen direct stocks against mutual funds, but if you are not an expert start small and learn more.
Few points to mention:-
1)Rather than investing all in lumpsum, invest regularly with small amounts.
2) You can invest more or less fixed amount every month, (like SIP in MF), and buy more on every dips.
3) Better to start with reputed stocks (that are consistent for past years), rather than experimenting too much.
4) Sometimes periodic profit booking is important, for that you have to track the market and have to be updated.
Now, let me talk about your portfolio, I will only suggest about what my opinion is about the stocks I am tracking/investing, but do your own research or take professional’s advise before taking any decision.
Dena bank – I would definitely not choose a PSU bank (and only banking stock in your portfolio) for me. There are champions private banks like HDFC, ICICI that are must in portfolio, others like Axis, IndusInd also good candidate.
Non banking financial sectors are also doing very well, so can consider that as well.
ACC is good long term bet.
Chemicals & Fertilizers –don’t follow much
L&T – looks good
FMCG –> looks good, you can add HUL if you like
IT –> TCS and Wipro would do, HCL looks good, I don’t follow Info Edge
I Don’t follow SAIL
Asian Paints –> very good
Don’t follow Castrol and Oil India – but I am investing in Cairn India in this sector.
Other than That – you can include1 or 2 from other sectors like Pharma, Auto, telecom, media sector as well.
Thanks for your detail analysis and suggestion on my Portfolio. You are absolutely right. I am not a beginner in stock market. I had stepped in stock market in 2008. I learned and practiced all types of investment / trading tools – like Trading of Buy and Sell of Equities as well as BTST, Margin Trading, Margin Plus Trading, Option Trading, Currency Trading, etc. During the period, I did lot of research work and learned various analytical tools and practiced them, too. In the learning process, I also made losses but did not stop learning and trading. For last one year, I am involved in day trading only on Options with a small Portfolio. I have improved my success rate above 90 per cent. Profit varies from 2-5 per cent of my Portfolio on daily basis.
As per my research, almost all of them are fundamentally strong and have proven Business Models. (I can trust them for more than 20 Years). I have invested the lump sum amount and don’t want to infuse additional amount because of following reasons:
1. Almost all of them provide Dividend (Annually or Quarterly Basis). It varies from 1% to 10% on my invested amount.
2. About 60% of them declare Bonus Shares. They declare it in an interval of 2-6 Years. Thus they will have 4-10 Business Cycles, which may give them space to grow their business as well as my Portfolio.
3. My target (expectation) from this Portfolio is only 1.00 Crore. During the period when ever this target is achieved, I’ll exit and invest the booked amount into secured and risk free deposits. Looking at the history of selected stocks of my Portfolio, about 30-40% of them have the capacity to deliver the result (expected target) at individual level also (considering the time span of 20 years).
4. According to my research Info Edge would become the multibagger stock of the next decades like- WIPRO, INFOSYS, etc. which did it in last 20 years.
5. I have included Dena Bank, Deepak Fertilizer and SAIL as the defensive stocks, which provide more than 5% dividend on my invested amount on annual basis. I personally don’t want to invest (lump sum) in Banking Stocks for long term. They don’t have legal provision of declaring Bonus Shares. They can be good for dividend and capital appreciation.
6. I have included Castrol India and Jayant Agro Organic for future demand and growth prospect on eco friendly products.
7. You are absolutely right for Pharma, Media, Auto and Telecom. I can include Pharma and Media but not interested in Auto and Telecom at all.
Thanks and regards,
Investment in direct equities is fa more riskier than investing in MFs. I hope you must have take this call after some serious consideration.
How did you choose this companies, any specific criteria (since you are investing for 20 years) and also have equally divided the monies among these sectors?
Why do you think that direct investment in equity is “far more” riskier than investing in MF’s?
I will put both equity and MF at same risk level.
Would you consider one chocolate cake and a set of 8 pastries in different flavour as same?
You can co better than this, give more convincing example/analogy.
Didn’t meant that ways.
I should have used a regular explanation instead of the one I chose. Peace!!!
I have given this answer in reply of Sumit. I do hope you got some of the reasons of my selections.
Dear Samir, why are you not opting the MFs? You may get more than 1 Crore Rs. or may fall well short of your target.
If I can get 1 Crore on MFs then I can also get Multiple Crores in Equities. In both the cases, risks and returns are similar in nature. This is only one part of my Retirement Plans. I have other Plans also which can take care of my Retirement. I am 100% ready to loose the invested amount but I am also 100% sure that in a span of 20 years it’ll help me to achieve my goal.
MFs are managed by Fund Managers, who work for their fees. So every thing depend upon their intention and capabilities. But investing in Stocks is like buying a company itself.