Some investors invests with a “Goal” in mind, obviously it is the right method to do. But due to greed factor that their investments would increase further, they neglects to do proper asset allocation.
Even though holding investments for long term would do “magic”to your investments, it is not the right way to wait for the last minute to withdraw your accumulated corpus!
One example to illustrate the above statement is- if one invests 10 Lakh Rupees lumpsum in March 2000 wishing to use it for his son’s graduation fee in march 2020. Seeing the positive returns so far makes him greedy and refuses to withdraw his corpus gradually before 3 years of his goal; what financial experts recommend to do for goal-based investing.
All are aware of March 2020 crash, Market has crashed to almost 38% due to covid, though it is best time for investing for long term, it is a non-negoitable goal to meet his son’s higher education! We are not blaming the market! He knows that markets has ups and downs frequently,It is the fault of the investor not to move his investments systematically to safer products.
Financial experts recommend to do STP(Systematic Transfer Plan)and SWP(Systematic Withdrawl Plan)at least 3 years before the goal due date. His equity investments should be systematically transferred to debt schemes; which are relatively safer
One should know that equity markets have upswings and downwards very frequently where one should not compromise on their goals especially non-negotiable goals. If your goal is negotiable(can be delayed)you can invests more in the bear market, but if the goal is defined, you should come out of your investments gradually at least 3 years before the goal due date. Do remember this