Am allways foxed by the financial consultant to “have goals” and plan for those goals. How absurd i keep thinking. Why should i have a goal? Cant i just save for a rainy day?
Some of us do invest in various mutual funds/stocks. We are told to book profits when the time is right. The question is what happens next.
If you had 10,000 INR in a fund and it has appriciated to 14,500 INR in 7 months, lets say we redeem 4,500 INR worth of units/shares that day to book the profit.
The next part of the story what we do with that money is interesting. We invest again in some other mutual fund/stock.
Now thats what i can say as a foolish thing to do since you would be paying brokerage/commision/loads for the new investment PLUS taxes to Government on various heads.
If you were to leave those investments/savings as it is it would have still given you the same appriciation/depriciation unless you were correcting/rebalancing your portfolio.
Then whats the intelligence in booking profits and how is it to be done…?
On hindsight it occurs to me that goals are what motivates people to save. It is also a reason to worry about!!
In my case either a tangiable goal could have been satisfied or that portion could have been transfered to a safer debt instrument and i would have laughed away to that profit!