Is there a Right Way to Reach Your Financial Goals?

Posted On Monday, Sep 21, 2020


Today we share with you one of the most important but at the same time one of the least discussed topic on investing.

While the title says 'right way to reach your financial goals', we are not going to discuss where to invest for these goals. No.

We are in fact going to talk about how to redeem when you are almost reaching your financial goals. Indeed the right way to reach your financial goals.

Let us start with an example -

Mr. A decided to be a disciplined investor. He chose to reach his long term goal by investing in an equity mutual fund whose investment objective matches with his own. (Perfect. So far so good.)

He wants to invest for 10 years. And so he does.

Mr. A has followed the long-term investing rule quite well.

Fast forward 10 years.

Mr. A is satisfied with his returns and is about to redeem.

Suddenly, a global financial crisis hits the markets.

Unfortunately, his investments see a major depreciation.

This happens. This happens to a lot of avid investors.

Why? Where has the comforting long-term investing story disappeared?

This is our topic of discussion today.

It's important for you to know this.

Especially post this major correction phase we recently went through...

The fundamental rule of redeeming is to redeem in a systematic way.

It’s called 'Systematic Transfer Plan' (STP).

You may also call it the best friend of 'Systematic Investment Plan' (SIP)

While SIP lets you invest for long term in a disciplined manner without being much affected by market volatility, likewise STP lets you redeem in a disciplined manner.

STP essentially means to gradually transfer your money from equity mutual funds to debt mutual funds in a phased way.

This will help consolidate your gains and generate accrual income, plus maintain enough equity exposure to gain from future market upsides.

Moreover, STP can also be done from your debt mutual fund to equity mutual fund. So it works like an SIP in this case.

Remember, you do not have to wait until the day you require your money to redeem.

Using STP allows you to make sure you skip the market volatility and enjoy a considerably smooth transfer of your money.

This is specifically significant for investors who are investing for their retirement.

As you reach closer to your retirement, make sure you start an STP and move your money to a relatively less risky asset class.

The benefit of STP is also the fact that your money is still invested. It's not lying idle in a bank account, which would happen if you would have redeemed your full amount.

Mutual fund investing needs you to regularly review your portfolio and strategically step back. All this just to make sure you make the most of your wealth creation journey.

Please understand when we stress about right way to invest, right time to invest, it is also equally critical to know the right way to redeem.

Together when you follow all the right steps you eventually follow the right way to reach your financial goals.

Editor's note: To know more about STP write to us at [email protected] Or give us a missed call at +91-22-68293807 and we will call you back.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

Mutual fund investments are subject to market risks read all scheme related documents carefully.

Please visit – to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

Above article is authored by Quantum.

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