Darjeeling-based WFH techie invests smart, wants to retire early

A diversified investment portfolio consisting of equity and debt elements, some liquid funds for emergencies and some real estate exposure make young Harsh Mishra a real mascot for good financial planning for other GenZs like him. With a stable job and controlled monthly expenses, he has set a financial independence score for himself.

The first episode of Let’s Mint Money, presented in collaboration with Groww Mutual Fund, saw Neil Borate, Editor, Personal Finance atLiveMint and Jash Kriplani, Senior Assistant Editor at Mint Money (Personal Finance), in conversation with a very special guest to see how this representative of the Gen Z universe is creating wealth over the long term by seeking the right financial advice. Watch the full episode here,

At a young age of just 24 years, Harsh Mishra, who works as an Open Source Engineer at LocalStack, a Switzerland-based firm, is well on his way to financial independence. He has bought a home in Pune and is managing to save almost 65-70 percent of what he earns each month after paying for all his expenses and the home. Mishra has chosen to live in the picturesque east Indian hill town of Darjeeling.

“I work for a cloud-based start-up and had the option to live in big cities like Delhi, Mumbai, Bangalore, but I have chosen Darjeeling. It is full of greenery, mountains, exquisite places, and so many good things to do. I save about 65-70 percent out of my current salary. I am mostly spending around 15,000-20,000. Apart from that, I have a staggered payment scheme for one of the homes that I have purchased in Pune recently,” he said.

Real Estate Investments

Mishra’s family invests in real estate and feels ‘real money is in real estate’. That is how the seed got sown to buy the Pune home. But, soon enough, he realized that real estate is not a liquid asset and he needs to diversify his investment to include other asset classes as well. He looked at several cities and zeroed in on Pune, where he bought the property after a lot of research and deliberation. He also looked at factors such as rental yield.

“Once I get ownership over the flat, the rental yield will come to about 4-6 per cent – there is definitely room for improvement. If you are looking at real estate as an investment, that may not be the best choice, because the rental yield is quite low especially in big cities,” he said.

Mishra started saving money right when he was in college – by means of many internship and scholarship programs – and this is what he used to fund his real estate investment.

“I started my first internship back in 2019-2020 as a web developer when I was in my first year of college. I was getting a stipend of about ₹5,000. I didn’t have a bank account, so the only place I could send this money to was my father’s bank account. My father gave me ₹2000 of my own stipend and actually started a mutual fund in my name, which gave good returns,” he said, as he explained what sparked his interest in investing at such a young age.

Pandemic Woes

When the pandemic hit, classes moved online and he returned home. He spent his time doing more internships which gave him rich experience as well as more funds to invest. This led him to take a more active interest in investing. He saw a mutual funds banner on his UPI app and started a basic SIP of ₹2,000-3,000, hoping to make the money increase in the future.

“I did not account for any other aspects of financial investment like the sharpe ratio, the AUM size, or anything like that. I was just mindlessly creating mutual funds at that point without seeking anyone’s advice. By the end of this whole adventure, I realised that I have too many mutual funds – almost 40-50. I also figured it was a mistake and I need to just crawl back to find something better,” he said.

Over the years, he has diversified his investments to include many different products but there have been a few more investment choices that he has regretted – F&O and Crypto. This was when he decided to seek professional help and got introduced to Akshay Nayak, a SEBI-registered investment advisor who lives in Bangalore.

When Nayak first saw his portfolio, his first reaction was that it is very cluttered and needs streamlining. “My large overriding suggestion was to put most of his money into a single large cap index fund, particularly the Nifty 50 index. On the debt side, it asked him to put his money into full liquid funds,” Nayak said.

The advice given to him was to put all his surplus funds into 1-2 large cap mutual funds – no mid caps or small caps. This is because he is a new investor with limited experience with regard to investing. As he gains experience and is ready to increase the risk quotient, Nayak will introduce mad and small cap index funds. “I also suggested a Public Provident Fund (PPF) – he worked with a swiss employer and did not have any retirement benefits or EPF. This was meant to offer stable, tax-free income to add stability to the portfolio,” he further added.

Now that his basic investments are on the right track, Mishra has set a financial independence score for himself. “The initial estimate is about ₹14-15, crores, and this is by the age of 50-55 years. I calculated how much money I need to put for every rupee that I am spending on myself. This will definitely keep changing over time due to factors like inflation,” he said.

Adding to this, Nayak spoke about how they planned to achieve this target and whether it was inflation adjusted or not. “At any given point of time, the amount of money that any individual would require to call themselves financially independent would be their current annual expenses multiplied by the number of years they expect to spend in retirement or post financial independence,” Nayak said.

“This figure will be updated year on year because we will be taking fresh inputs for monthly expenses and annual expenses and coming up with separate FI targets and separate monthly investment targets every year based on the fresh inputs. This allows us to account for inflation and expenses, as well as changes in life situation,” he continued.

In addition, Mishra has also been advised to keep at least 6 months to a year’s equivalent of his standard expenses in highly liquid avenues which can easily be converted into cash without any significant change in value of the investment at the time of liquidation. This acts as a contingency fund. This is only meant to be used in the event of a real financial emergency.

Here is what Varun Gupta, CEO of Groww Mutual Fund, has to say about Harsh Mishra’s approach: “Starting early with disciplined savings, Harsh’s financial approach showcases solid foresight and maturity in risk management. Young, debt-free investors can follow suit by investing in equity from the outset to fully leverage the power of compounding over time.”