In the 4 odd years since I retired, I never felt like I was missing out on my salary, except for during this period. The stock markets are falling and RBI has started hiking interest rates. Which means that NAV of both debt mutual funds and equity mutual funds are falling. That only means one thing – invest more! Unfortunately since I don’t get salary or any other income anymore, I have to sell some mutual funds and buy another. Normally I do this by selling the mutual funds that are gaining and buying the mutual funds that are falling. Here I am not talking about individual funds. I am talking about the type or category of mutual funds.

So when equity market is falling, I normally sell debt mutual funds and invest in equity mutual funds. This generally works because the debt mutual funds are not volatile and they are not falling. On the other hand, when I feel that there is a possibility of RBI cutting interest rates for a long time, I sell some equity mutual funds and buy very long duration debt funds. The last time this happened and I made good use of this strategy was from 2015 to 2019. The interest rate dropped from 7.75% to 5.75% and the long duration funds went into double digit returns! During that same time I felt that the equity market was too expensive. So I merrily sold equity MFs and bought into long duration gilt (debt) MFs.

On the other hand, if we are in an interest cutting cycle and the stock market is looking attractive, I would sell some short term debt mutual funds and buy into equity MFs. Unfortunately for me, we are currently in an economic cycle where the interest rates are being raised when the markets are falling. So both type of mutual funds are in the red. Selling one and buying the other does not make a lot of sense. This would be those times where if I had a job which is giving me money that was never invested in the first place, I could have made some excellent investment choices :). Well that is the way of life now isn’t it.

A situation like this however did occur when I was working. In fact it happened as soon as I first started investing in 2011. At the time, the equity market was too expensive according to me and at the same time RBI has started to raise interest rates. The repo rate went from 6.5% in 2011, all the way to 8.00% in 2014. So when the interest rates are going up, it doesn’t make sense to invest in medium to long duration debt mutual funds. And the short duration funds are giving low returns. So where does one invest? Well into the falling equity market of course. I kept on pumping my salary into equity mutual funds quite a bit during that period even as my total corpus was showing negative return for almost 3 years until end of 2013. Those investments later helped me build my retirement corpus to retire early.

So I wish I had a job that gives me salary which I can invest without feeling sorry about moving money from one losing mutual fund into another :). Of course I am only joking. I really don’t want to go back to work, but, if I were to have an income, it wouldn’t hurt me as much moving money around. Having said that, I am happy to be retired and enjoying every bit of it. Still not even close to getting bored or worried about income or my corpus or getting back to work.