Amit Upadhyaya, a Pune-based corporate executive, has achieved financial independence at age 46. Despite working for a French multinational (Dassault Systemes) for two decades, Upadhyaya does not credit his wealth to a high corporate salary or employee stock options. He sees it as the outcome of investing in the right stocks and funds and holding on to them.
Upadhyaya also followed a policy of buying the dip, which was maximized during the covid-19 pandemic. He withdrew ₹50 lakh from his SBI Maxgain home loan overdraft account and deployed it in the market in March and April 2020. The amount has tripled since then (3.6 times to be exact), which Upadhyaya credits for accelerating his financial independence journey.
The loan currently has an interest rare of 9.2% but was around 8% during the pandemic years. Since the interest was tax deductible, the net cost came to 5.6%.
“Two stocks have really acted as compounding machines in my portfolio and so have the small cap funds I bought over a decade ago,” Upadhyaya said.
“When TVS (Motor Co. Ltd) announced its interest in the racing circuit, I saw it as a truly serious bikemaker. This was before the launch of the TVS Apache RR. No other player was doing this at the time. I bought the stock in 2011 and kept adding in the next few years,” he said. “I also bought HCL (Technologies Ltd) because I felt it would outperform the largecap IT stocks.”
TVS was trading at about ₹50 per share in 2011. On 25 October, the shares ended trading at about ₹2,442 apiece. This translates to a compound annual growth rate of nearly 35%.
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Upadhyaya also invested in SBI Smallcap, HDFC Smallcap and PPFAS Flexicap. He estimates that overall his portfolio has compounded at 19-20% over the last decade.
He is now sitting on a corpus that is about 41 times his annual spending. This is not counting his primary residence. Upadhyaya believes that 25 times is a sufficient amount but he has accumulated an additional amount to take care of the education of his daughter, currently in her early teens. Upadhyaya’s wife works as an SAP consultant and also expects to retire in a few years.
A pandemic opportunity
The Pune-based corporate executive began his life as a software engineer. After almost a decade in research and development, he moved to the business side of his company, a subsidiary of the French multinational Dassault that designs aeronautical and other systems.
After he was sold some infrastructure funds by a mutual fund distributor during 2004-07, Upadyay swore off intermediaries and began to do his own financial research. This led him to develop a ‘buy and hold’ strategy.
Upadhyaya bought his first house for about ₹37 lakh in 2008, taking advantage of a recessionary dip. He sold it for about ₹75 lakh in 2015 and bought a bigger house.
“I went and stayed in a fancy society on rent for a year while my new house was being built. I took advantage of the ridiculously low rents at the time,” he recounts.
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Upadhyaya took a loan for another ₹70 lakh and moved into his new home. The loan was through SBI Maxgain, an overdraft facility provided by the bank to homebuyers. Borrowers can park excess cash in the OD account and prepay the loan whenever they want.
When the covid-19 pandemic struck in March 2020, Upadhyaya used this feature to take out ₹50 lakh from the money that he had already repaid (parked in the OD account) and deployed it in the stock market, picking up banks and auto ancillaries.
“I reasoned to myself that either the world would end—in which case having a crore or not doesn’t matter—or alternatively there would be a recovery and my bet would pay off,” Upadhyaya said.
History took the latter course and Upadhyaya tripled his pandemic investment in 4 years. “I have still kept the loan open in case I need the money when a market opportunity comes,” he said with a chuckle.
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A lopsided portfolio
Upadhyaya, for all his careful financial planning, faces some tricky issues.
The massive compounding in equity over the past several years has tilted his portfolio towards equity (85%). The balance amount is mostly in employees provident fund (EPF), which he plans to deploy in debt or hybrid funds after he retiring.
He also has money in public provident fund (PPF), Sukanya Samriddhi (a government-backed savings scheme for girl children), and gold bonds. This will create a buffer from which Upadhyay can withdraw a regular income. This will also allow his equity money to stay invested longer.
However, the equity skew puts Upadhyaya at risk of a market crash. Also, many consumers have reported trouble with EPF withdrawals. Upadhyaya, though, has meticulously merged all his EPF accounts and hopes his careful recordkeeping will avoid any withdrawal issues.
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Upadhyaya also lacks a decent health insurance policy of his own. As for life insurance, he doesn’t see the need for it having accumulated a large corpus that his family can fall back on in case of untimely death. As a home-owner he has few expenses in retirement and anticipates spending no more than ₹2 lakh per month.
That said, his strategy of deploying the home loan money into equity is a high-risk move—market returns may not always exceed the interest rate.
‘Retirement not an idle time’
“I like to go on road trips and take drone pictures. I spend time on fitness and cycle long distances. I also love riding a sports bike. I have a creative side in writing and movie-making, which has not been fully explored. There are a lot of things I want to do in this phase of my life where I am not working for money but for my passion,” Upadhyaya told Mint.
He also wants to pursue consulting work, and possibly take up teaching assignments. Apart from that, he wants to share his knowledge of personal finance with society and help people achieve financial independence.
“Retirement is not an idle time,” he said. “It is a time to get busy with all of the things I am passionate about, away from the corporate grind.”
