Hello Readers!
We are aware of the current market condition and the reason behind it. We also know that market will take time to recover itself completely, say 1 year, or maybe more than that. Well, for youngsters or young investors who are investing in the mutual fund for their retirement, the investment has ample time for the market to bounce back. They need not bother much for their retirement corpus.
Investors who are retiring or is at the cusp of retirement, in the present market correction, the situation can be considered not fit for their retirement corpus. On an approx., we can say that one’s retirement portfolio could have been down by 25 percent or more.
If you are one among those who are going to retire in this economy, I suggest the following things discussed below, which will help you chart your financial path.
STAY INVESTED TILL MARKET RECOVERS
Although it’s hard, we suggest staying calm and invested until the market recovers. If you tend to sell your investment in this correction of the market, you will turn your temporary correction in permanent loss. Remember, “selling low and buying high” is never advisable and profitable in the investment sector.
It has been seen in history, that market takes around one year to recover (partially) from a bear phase. And whenever it recovers, it is sharp initially. So, we suggest, do not redeem your investment, for now, if you do so, you may lose a financial opportunity.
DON’T EMPTY YOUR EQUITIES
If you are near to reach your retirement, remember you would have to plan for the next 25-30 years expense if you are retiring at 60. So, we suggest do not take out all the money from your Equity mutual fund at one-time. If you will go partial or staggered withdrawals, it will help your equities for upping your portfolio growth.
KEEP CASH
For retirees, it is advised, while you plan your retired portfolio, you should include plans for short, medium, and long-term fund requirements. So even after retiring, you can still have a significant portion inequity that will be allowed to grow effectively, while the debt portion takes care of your income stream for the next two to three years. After this, with the cash you are left, pad up your emergency fund, in liquid funds.
IT’S THE TIME YOU SHOULD START TO CONSERVE
The market is down due to the corona crisis, which is not over yet, it may delay the market to recover and this will affect personal incomes. So, basically, at this time, you should review your financial plan, and cut out the unnecessary expenses. If you have a big expense like buying a car or house, I would suggest delay it for some time. Also, quickly pay-off high-interest debt like credit cards and restrict yourself from taking further debt.
POSTPONE YOUR RETIREMENT
In this market correction, I would suggest postponing your retirement. Working for more one or two years will ease your financial situation and also let you save in the process. Moreover, your existing retirement nest will get a few more years to grow.
If you are not comfortable with full-time work, opt for part-time work, it will help you keep motivated.
At last but not the least, it's okay if your retirement portfolio is showing a 20-25% downtrend, stay calm and invested, you still have about 25-30 years of retirement life. Don’t empty your equity fund investment and wait for the market to recover, you will get a good return with an inflation-beating feature.
For any kind of investment query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).