The start of a new year is always full of excitement and hope. There are new opportunities to explore and you hope for a lot of significant events to take place in the year, irrespective of what may have happened in the earlier one. In my previous posts I had outlined how 2019 was a fairly poor one both for my own active income generation as well as for the markets. In this post let me talk about my plans for 2020.
One must always start with the cash flow outlook for the year. Fortunately, with both my children becoming financially independent of me now, courtesy their careers, my major head of cash outflow is gone now. Currently their college education fees are all done and even though Ronju may get into a B school sometime in the future, we can always look at it through Education loans. On the flip side our expenses on travel are ever increasing due to the number of trips as well as the way we travel. Last year we had 3 vacations outside India, 2 full vacations in India as well as several shorter trips for leisure or family issues. 2020 looks similar as we already have a planned to visit somewhere out of India in March. Our daughter is fortunately staying with us now and our son is closeby in Bangalore. Based on all these I am looking at cash outflow in these terms :-
- Regular household expenditure likely to be in the range of 6 lacs
- Travel expenses can be estimated at 6 lacs to be on the safe side.
- Family support will be in the region of 2 lacs.
- Rent for our Hyderabad apartment is around 3.5 lacs.
- So overall cash flows required will be in the range of 17.5 lacs
Against these the cash inflows I am expecting in 2019 are as follows :-
- Interest from Tax free bonds, InvIT funds and POMIS will be about 4 lacs
- Dividends from Stocks and Equity MF schemes will be about 3 lacs
- Capital gains from FMP redemption will be about 2 lacs
- Rental income from our Chennai apartment will be about 4 lacs
- Income from Debt funds and stock trading will be about 1 lac
- Repayment of an earlier loan will be about 3.5 lacs
The above looks good but what if the markets continue to do badly and the dividends dry up? The first line of defense will of course be my active income generation through my Consulting practice and Mentoring services. Additionally, as a backup plan I have the PPF accounts of both me and my wife. At present it earns about 5 lacs in interest per year and I can dip into it if needed. Another way could be to redeem some of my Debt MF schemes, to the extent I need the money. A final option will be to sell some stock that is doing really well but I do not feel this will be needed.
What about investments then? Well, in my present stage of life I am not looking at too much investment obviously. Even then, I had started a secondary stock portfolio in 2018 and have invested about 11 lacs in it so far. My idea is to let this portfolio grow and also do selective trading in it, something I have wanted to do for a long time. I do not want to do this on my primary stock portfolio where the plan is to have it for the really long term. Based on all of these the new investments I plan to do in 2020 are as follows :-
- 3 lacs in the two PPF accounts that we have.
- Put all FMP redemption money in Hybrid funds – this will be about 10 lacs in the year 2019. Part of this may also be used in my secondary stock portfolio.
- Build the Secondary stock portfolio to at least 14 lacs by putting in a minimum of 3 lacs in this year.
- Look at any interesting NFO themes as they become available.
- Keep adding to my Primary stock portfolio based on available money.
Where will the money for this come from? Well, what ever income I have from my Consultancy practice and Mentoring services will all be invested in above avenues as my passive income is adequate to take care of my cash flow needs.
So things look rather good right now, hoping that the markets will recover this year !!