Market correction, Index funds, and DIY

OK, here is the first attempt to post at least 1 article each month in 2022. Will focus on financial progress, learning and forecast for next few months. 

January 2022 financial highlights

Expenses and savings

• Increased expenses for home improvement as we got multiple household items repaired.
• Booked all train, flight and cab tickets for upcoming travel to hometowns in February and March. 
• For the flights tickets, we utilized our credit card reward points to pay 70% of the total ticket price. 
• Savings rate was at 88.82%, slightly higher than the usual ~85%. This was due to a one-time bonus received in Dec 2021 salary. 
• Multiple FDs and RDs matured in January 2022. The total interest received was 80% higher than our total monthly expenses.  

Investments

• Unrealized profit in our equity portfolio declined by ~8.5% as the indices witnessed correction in the later half of January.
• We invested lump-sum amounts(apart from ongoing SIPs) during major correction days.
• We increased our overall SIP amount by 30%. This will allow more allocation towards Equity by end of the year.
• We started SIPs in 5 index funds - UTI Nifty Next 50, Motilal Oswal Nifty Smallcap 250, DSP Equal Nifty 50, Motilal Oswal Nifty Midcap 150 and Motilal Oswal S&P 500. 
• We now have 5 years of household expenses invested in FDs, maturing every month until March 2027. We will continue to reinvest the maturity amount each month, but avoid fresh investments in FDs.

Realizing importance of DIY(Do-It-Yourself)

In January, we got repair work done for fixing water leakages and a creaking sofa. While it was already a challenge to find a plumber, the prices have also increased significantly for minor work. Increase in labor cost is good to uplift the poor, but it will disrupt our budget once we retire. 
Thus, we will have to focus on DIY for tasks which do not need specialization. I was able to replace a wall lamp holder with normal household tools while only paying Rs 20 for the material. Similarly, fixing a leaking tap is pretty easy with some tools and reference from YouTube videos. Going forward, we will invest in tools for minor repairs instead of waiting for days for someone.   

Not all kind of work can be DIY. For ex. the sofa repair was a pretty complex effort and there is no value for us to learn as it, won't be required for next 5 years. Similarly, while a tap leakage is simple and easy to fix, there are complex repair work requiring skilled plumbers. 

Forecast

• As travel tickets already booked, no major expenses planned for Feb or March
• We expect to maintain the savings rate at 85% or above. 
• We will need to hire a house-help once the offices reopen, probably in March.

That's all for this post. Now heading to see the announcements from the Budget 2022.