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Though there’s tons of content on the internet for whether or not should one invest in mutual funds or during a particular market cycle, not much is covered about what you should do if you are nearing the end of the term of your financial goals. In this article we will cover the same. Here are two things that you can do when nearing your long-term financial goals:

Reassess the value of the financial goal
Reassessing the value of your financial goal near its maturity becomes even more important if you have failed to track and reassess your financial goals on a regular basis in the past. When you invest for a longer duration, say ten years or more, a lot can change during this course. Several things could have happened, such as perhaps the effect of inflation could be felt greatly on your investment than anticipated, or maybe the amount of the goal could be lower or even higher in absolute terms. Lastly, it is possible that in this duration, the nature of the goal has changed as well. For instance, Gaurav has been saving for 15 years to send his daughter abroad for her higher education. However, a lot could have changed in this duration. However, in the interim, several things could have gone in the other direction. Perhaps, the child does not want to finish her higher studies, or maybe the international colleges that Gaurav was interested to send could have set up their campuses in India as well.

Thus, if you haven’t reassessed your long-term financial goals yet, it is important that you sit with your family at least three before the completion of the goals and ensure that your expectations are still aligned with your investments.

Take your gains

When an investor invests for long-term, it is usually advised to increase the equity exposure and work your asset allocation accordingly. However, the closer you move to achieving your financial goals, the lower should be the exposure towards risk. Let’s assume a scenario where Manvi achieves her financial goal’s value before the anticipated time or expected investment horizon. Suppose, the time remaining for Manvi to fulfil her goal is less than three years away. In such a case, it’s advisable that she redeems her mutual fund investments and reinvest the entire amount in safe investment options – i.e. an investment option that offers stable returns and has low risk exposure. In this case, the money that Manvi reinvests will continue to grow in value, thanks to the power of compounding, though, at a much lower rate. However, the good part over here is that the capital won’t be exposed to high levels of risk and Manvi would be successful in preserving her wealth generated. You  can also choose to systematically withdraw your mutual fund investments with the help of systematic transfer plans (STP).

Even if you haven’t received the amount of returns you had expected, and your goal is barely 1 to 2 years away, it is still advised to redeem your investments from risky assets and reinvest the entire amount in relatively safer types of investment.

Though long-term investment goal planning must be a calculated and deliberate part of one’s financial plan, it must not get static. Depending on the market change, external events and other circumstances, be flexible with your mutual fund investments in the long run. Happy investing!

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