The stages in life are distinct – accumulation and de-accumulation – as are the investment decisions related to each stage. However, needs and wants are constant. It is traditional for the novice/intermediate investor to turn towards SIP (Systematic Investment Plan) for accumulating wealth and set aside legacy fund at the end of wealth creation journey given SIPs' well known benefits.
Accumulated wealth is generally earmarked for big-ticket expenses or specific goals and can be depleted quickly without any source of income or appreciation during the de-accumulation phase of life. Not to mention, medical costs also burn a hole in wallets from time to time.
Investors have matured and so have solutions, but discipline still is “king"
Balancing larger expenses and allowing time for capital appreciation do not go hand in hand, notwithstanding regular expenses as well. Investors wary of interest rates, inflation, and socio-economic independence are inclined to reduce risk appetite to protect capital. They are unsure whether to revert to staggered investing or keep out of it and secure a corpus for expense and legacy funds or invest lump sum.
This is where a matured solution steps in. The approach is to look at plans that enable you to withdraw a regular sum from your investments at a predefined frequency as per your need. Disciplined withdrawal as per your suitability and requirement while not heeding market waves.
Investors are sceptical of erosion of capital and constrained growth with respect to withdrawal plans. What they do not understand is that this solution is suited to support financial planning.
Below is an example of a withdrawal plan set up with Nifty 500 index fund. We can see how it helps set up withdrawal as per
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