'How do I protect my gains?'

Sumeet (45) has an equity portfolio of about Rs 40 lakh. Amid the ongoing fear of a market crash, he wants to protect the gains that he has earned over the last one year during the bull run. At the same time, Sumeet also fears missing out on the opportunity of getting higher returns if the market continues to rise. He would need about Rs 20 lakh from this corpus within three years for his daughter's higher education. Sumeet plans to keep the rest of the corpus for his retirement. He wants us to guide him through the dilemma. Never exit equities in haste Since equities are highly volatile, Sumeet should not wait till the last moment for a non-negotiable goal like his daughter's higher education. He should rather start redeeming the required money in equal monthly instalments through a systematic withdrawal plan (SWP). Remember, staggering your exit from equities is as important as staggering your investment through SIPs. When you set up an SWP, a part of your accumulated corpus is transferred to your bank account or the chosen fixed-income fund periodically. Just as SIPs help average the investment cost, SWPs help average your withdrawal. They also ensure that you don't sell out at the bottom. Of course, this also means that you don't sell out at the top either. If Sumeet chooses

This article was originally published on December 29, 2021.