In the community tab of our channel, I made a post saying that you could ask questions and I would answer the top ten questions in a video. That is that episode.
If you did not know about this, then I think you haven't subscribed to this channel yet. You should definitely consider it.
Hello, my name is Vijay Mohan, and you are watching investment insights.
The first question is from Thiru. He has asked, "Can you share your investment portfolio? It will give us an idea..." It's a fair request, but there are some problems with sharing my portfolio.
Thinking, "He's doing it. We should do it too!", many people will try to exactly copy my portfolio.
If I share my current portfolio, and I sell a stock tomorrow, there is no need for me to tell that to the public, right? Then what will happen? Those people who copied me could lose money.
Each person's portfolio, depending on their personal goals and risk profiles, are completely different.
Dravid can't play like Shewag. And Shewag can't play like Dravid.
Each has their own game plan. That is why it is not a good idea to copy someone else.
It will lead to many problems. I know you have asked this question to develop your knowledge. But it can end badly for many people.
So, sorry. I won't share my portfolio. But my portfolio isn't great enough to share, really. It's a very typical, normal portfolio.
I follow all the strategies that I share in this channel. Because of my risk profile, the percent allocation could be little different. That is all.
The next question is from Nagaraj. He asks, "Leveraged ETF TQQQ has fallen 75% from its peak. Is this a good time to buy?"
We should always keep in mind, even if we buy it cheap, investing in leveraged ETFs is still gambling.
It isn't an investment. The Nasdaq index has fallen 30% from it's peak. It's leveraged ETF, TQQQ, has fallen around 75%.
It is definitely cheaper than the price it was 6 months ago. But, the Nasdaq index has only fallen 30% so far. What it if went down by 50% from peak?
Then it would have to go down 30% from the current price. That means TQQQ will go down 75% for that.
Are you ready to handle that kind of downturn? If you say yes, then you can have around 10-15% exposure in your portfolio.
The next question is from Raju. General understanding is Saving 25 times our annual expenses or more means that we have attained our financial freedom.
But as our annual expenses change each year, with education costs for kids, medical insurance, etc, how are we supposed to calculate the amount we need for financial freedom?
Good question. How much money do we spend every year to maintain our current lifestyle? Using that, we can target 25 times those expenses.
Our annual expenses can increase due to lifestyle upgrades, inflation, or both. As these changes happen, our target for financial freedom changes as well.
We should expect these changes. As per these changes, our plan changes dynamically as well. These are all expected spending. But there are one time costs as well.
For example, Let's say that we buy a new car with cash. That year, our expenses will be very high. We can keep big one time costs like these separate.
We can subtract this from our net worth. But we don't have to add it to our annual expenses.
If our car insurance expenses increase because of it, though, then we have to add that to our annual expenses. That is what we call lifestyle creep.
Just like that, we can account for kids education costs as well. The huge one time cost of college does not have to be added to our annual expenses, but should be subtracted from our net worth.
After all of this adjustments, the financial freedom number we calculate is, still just a number. We are using it as. a rough guidance to measure our financial strength.
That is all. We are not launching a rocket based on this number. So it's okay to be little off.
The next question is from Bilal. "China is growing faster than the US. Is this the right time to invest in China? Can we have 15% allocation to the Chinese market?"
Did you recently read Ray Dalio's , "Changing world order" book? If you ask him, he will say that China is the future.
China does have a good chance of growing bigger than USA in economy. But it isn't an easy thing to invest in their market.
No one can say when they would change any regulations. They are very unstable.
Last year, they didn't let tech companies to grow, introducing new rules and other regulations that hampered their growth. So, personally, I am not that interested in investing in Chinese companies.
But as you are saying, it is okay to have 10-15% exposure in their market.
The next question is from Rooban. "There are so many successful traders in the market. So how come investors like you don't encourage trading?"
Good question. Zerodha's CEO, Nithin Kamath, has said "Out of all active traders, only 1% have beaten the fixed deposit rate. 99% of people didn't even beat the FD return."
But all of the 99% strongly believe that they are part of the 1%. You are also part of that 1%, right?
The next question is from Kirupan. "I am 17 years old. I want to invest in index funds. Is it a good idea?"
It's a great idea without any doubt. Most kids of your age want to buy iPhones, macbooks, etc., Just your thought of investing in an index fund itself is very impressive.
But before you do that, two things. Make sure that you are investing your own money. And make sure that you understand the risk that comes with investing in an index fund.
There is a whole episode on that topic on this channel. Make sure you watch it and understand the risk, and then invest. Best wishes on your investment journey.
Next question is from Karthik. "We are investing for a long term goal. But when we get close to our goal, how should we change our investment strategy?"
When we get close to our goal, the best option is to transfer that money to a savings account and keep it safe. When we are so close to use that money, it isn't a good idea to take any kind of risk with it.
The next question is from Rupachandran. "If we go back to India from the US, should we keep our investments in the US market or should we switch it to India?"
Before answering this, we should know couple of things. One- Most of the US banks and brokerages won't accept foreign addresses. They will freeze the account.
Only very few, like Charles Schwab and Interactive Brokers, will accept international addresses.
The next thing - Inheritance Tax. If we aren't a US citizen or resident, then for every dollar over 60,000, there is 40% inheritance tax.
So if you ask me, the best course of action is to liquidate all accounts other than retirement accounts before leaving.
The next question is from Vijayan. "Is it a bad decision to not take any loan or debt in the US? Can it affect our credit score badly?"
If we already have a good credit score, then there is no need to get a new loan. If we consistently use at least one credit card, that is good enough. But we have to pay the full credit card balance at the end of each month.
The next question is from Sivakumar. "85% of my portfolio is in cash. I want to invest this 85% using SIP over the next 12 months. Is this a good idea?"
We have already gone over this in the lumpsum investing episode on this channel. Why do we invest? We invest so that our investments can grow.
So however much time we can give for the money to grow, we should. That too, considering the current market situation, we can invest everything immediately.
Or, we could invest over the next 3 months. Waiting for 18 months doesn't seem to be a good idea to me.
Let's cover a bonus question. This question is from Sundar. "You have used the 2008 financial crisis to your advantage. Just like that, can we take advantage of the current situation as well?"
We know that no one can time the market. But the prices on the market today are definitely cheaper than the prices 6 months ago. I don't know about you, but when something I want goes on sale, and if I have the money, I will definitely buy it.
All other questions, I will try to answer in the comments. For everyone who submitted their questions, thank you. We will soon meet again in the next episode. Thank you.