Year In Review – 2020 Investments and Redemptions

In the past few posts, I have written about my expenses, investment returns and net worth. In this post I want to show you my investment pattern over the last year. I will try to explain my weird investment behavior. A word of caution though. Do not copy my investment style. It will most likely do you more harm than good. The reason is quite simple. I am a retired person with no income. If I had a salary I would certainly invest differently (read more equity investments). I will most certainly do my monthly investments and not the random investments as you will soon see.


The pattern

First, lets look at my investments and redemptions in debt and equity mutual funds. Negative numbers indicate the times when I sold the funds and positive numbers indicate purchase of units. I do not hold stocks, so all the transactions are in and out of either debt or equity mutual funds and nothing else.


Transactions in debt mutual funds

Transactions in equity mutual funds

Greed

What you will immediately notice is that I have been selling equity mutual funds during the early part of last year. The reason was that I felt the market has run up too much (what ever that means). The equity funds that I sold made their way into debt mutual funds (see the top graph). Then there was a bit of quiet period from mid February to mid March because there wasn’t much I could do. I sold all the equity that I wanted to.



Fear

Then from mid March I started investing in equity with the same zeal that was last seen in January. And everyone knows the reason (hint). You will notice the inverse happening to my debt mutual funds. No income remember? But this bliss did not last long unfortunately for me. There was a black swan event that halted my merry investment plan. That event is not COVID (although that was the trigger), but it came in the guise of Franklin winding up 6 of its debt funds.



Quiet period

As I mentioned before, a large portion of my debt investments were in Franklin Ultra fund. And with the windup I wanted to wait and watch what would happen with the funds before I took any decision. When the e-voting was announced I was convinced that the money will come back and I will have to contend with a significant tax burden. So I did not want to sell any other funds that will increase the effective tax.



I waited for far too long as the market recovered smartly and I did not find any more opportunity to invest in equities. Well unplanned events happen, and we just have to be resilient and make new plans. The quiet period was from mid April to mid June. During this time I stopped investing even for my daughter. Bad idea.

Confusion

From mid June till the end of 2020 there wasn’t much activity. I was selling a few debt mutual funds every month to fund my living expenses. You might have noticed a few small spikes all over the place in equity chart. Those were times I was investing in mid or small cap funds because I was thinking they were slightly undervalued. Now I don’t think any fund is undervalued and hence the flat line since November.


Another significant event is in the debt chart. You will see a sharp down spike in July and a bump up a few days later. That was the payment from Vodafone segregated papers which looks like a redemption (downward spike) and then I invested the amount back into another debt fund (the bump).


Conclusion

There you have it, my investment behavior. As usual, I have done some silly business and COVID did not help. But in the overall scheme of things, it ain’t too bad. Remember once again, if you are still earning, please do continue your SIP per your plan and asset allocation. Don’t worry about market conditions.


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