I am 39 and want to create a retirement corpus. I plan to invest 100 per cent in equity for first 10 years and then allocate in 80:20 ratio to equity and debt. I cannot figure out how to exit after 20 years.
It is best to exit systematically from equity funds. When you are close to retirement, start withdrawing small amount at regular intervals and park in debt instruments.
It is possible that the markets are low at the time of exit, but just like you invest systematically to negate market volatility, withdrawing in the same fashion will even out the risk.
However, do not put the withdrawn amount into pure debt instruments. We say this because the real value of your investments will start depreciating as debt investments cannot beat the high rate of inflation.
Keep expenses of the next four to five years in fixed income instruments and the rest in equity. This will help you beat inflation and provide a sense of security to meet the near-term expenses.