How To De-Risk Your Investments When The Goals Are Near

As a long time investor, each year you would have religiously invested across asset classes and investment products to save for the long-term goals.

- Vishwajeet Parashar

Your discipline and patience have now paid off. The time has come for the goals to be met. And, you need a plan to meet them and not spoil the hard year’s toil.

Your investment portfolio for each goal would typically have equity shares, equity mutual funds and fixed income investments among others. Now they have to be redeemed and put to use. However, taking the right decisions as your goals approach is extremely important. Unlike in the accumulation phase, where taking risk through equity-related assets was inevitable, the de-risking process becomes important nearing goals.

De-risking should ideally be started about three years from the goal and one should start shifting volatile assets such as equities to debt assets. The idea is to derisk your accumulated corpus and shield it from any further volatility. The de-risking, however, has to be for specific goals and in a systematic manner.

Existing investments nearing goals