Hi Experts:
Let’s assume a hypothetical scenario. I’m saving 5500 p.m for my daughters education (19 years away) with a goal of accumulating corpus of 50L. Assume that 50 L is enough and I can only put in 5500 p.m and cannot increase it.
Now, let’s assume that after 14 years, my target is reached (5 years ahead) due to good market conditions. It’s very possible — for all the doubters, go to http://www.moneycontrol.com/mutual-funds/nav/hdfc-equity-fund/sip-calculator-MZU001.html and you’ll see that you would have gotten a CAGR of around 25% from 1999 to 2012.
Anyways, coming back to the question, once target is reached, what to do? Move entire amount to debt fund? Or do a STP to debt fund? In both cases, if the current tax situation prevails LTCG is imposed. Both methods have plus and minus.
Plus in moving entire corpus to debt fund is that you’re off course protecting the target. Minus is that you’re possibly missing out on further gains.
Can experts shed some light on this?
Thanks,
Ram