As we became first-time parents, there was an expense spike during the month of January. This was primarily due to travel arrangements for our parents, a birth-related ritual-naamkaran sanskar, and gifting.
Luckily for us, the Covid-19 situation was relatively better in January. However, we still took utmost precautions and the naamkaran was a low-key affair.
During the month of February and March, we travelled to-and-fro our hometowns, incurring more travel expenses. However, the remaining expenses started coming down and we hope to be back to our previous savings rate(~85%) in the April – June quarter.
Below are major highlights for the last quarter
Savings rate
- January – 77.9% (lowest since January 2020)
- February – 82.82%
- March – 83.94%
Average savings rate for the 3 months was 81.55% which was around 3% lower than the last quarter.
Expenses
Rent and maintenance continued to be the highest at 41%. We were able to convince our landlord against a rent increment for now. Although we really like our current accommodation, any further increase in rent would make it lesser value for our money.
Groceries were the second highest expense at 15%. In the month of January, we spent almost double on groceries compared to our average monthly spend. This was expected since both our parents stayed at our place for most of the month.
Maternity related expenses(11%) and travel(8%) were the 2nd the 3rd highest after groceries(15%).
While the remaining expenses were as usual and evenly spread, we are super excited about the new spend category of ‘Baby Items’ which will definitely increase in future.
Below pie-chart depicts category-wise expenses:-
Equity investments continued to grow
RoI in equities(direct stocks and mutual funds) continued to grow in the Jan-Mar quarter. The month of February 2020 increased our overall gains by almost 9%. At the end of March 2021, the unrealized gains from our equity portfolio is 17.69% compared to 8.99% at the end of Dec 2020.
Portfolio Income
- Interest from savings bank accounts and matured FDs – Rs. 65, 838
- Profit realized by selling direct stocks and mutual funds – Rs 46,161
Uncertainty over small saving schemes
On March 31st, the Government on India announced interest cuts on small savings schemes like PPF, NSC, SSY etc. Being an active investor in PPF, this was concerning for us as the interest rate would have reduced of 6.4% instead of 7.1%. We were also planning to open a sukanya samriddhi yojana account for our daughter for which the interest rate would have fallen from 7.6% to 6.9%.
Although GoI withdrew the order on the very next day, we have a hunch that the rates will be reduced in future. Thus, we will wait for the next quarter before investing any major amounts in these schemes.
Forecast for next quarter
The second wave of Covid-19 in India is breaking all records since start of April. All of us need to follow Covid appropriate behavior to ensure this situation does not get out of control. We will continue to follow strict lockdown(either Government imposed or self-imposed) to avoid chances of infection. Thus, the expenses should go down at least 3-4% as compared to Jan-Mar quarter without any expense spike.
The response of equity markets to the second wave of Covid is weird. Unlike 2020, there hasn’t been significant volatility or downside so far. Anyhow, we plan to book some profits from the current levels and invest more if the markets crash in future.
Progress towards FI
Our net assets increase by ~2.5X (X being our yearly expense) during the Jan-Mar quarter. It was better than our expectation and few steps closer to our FIRE target. Slow and steady wins the race, hopefully :).
That’s all for this post. Stay safe, stay healthy.
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