process
Match Money To Its Horizon
The rule
Match each goal to the right home. Money you need soon goes in safe debt and cash. Money for far away goes in shares, where swings have time to settle.
Where it flips
Used blindly, the rule can keep a goal fully in shares right up to its date. Then a last-year crash can hurt it. So slide long-term money into safer homes as the goal date comes near, not on the date itself.
Every rupee you invest is for a goal with a date. That date should decide where it goes. Money you need in a few years belongs in debt funds or fixed deposits, where the value barely moves. Money you will not touch for ten years or more belongs in shares, where the ups and downs have time to smooth out. The danger is a mismatch. Long-term money in cash slowly loses to rising prices. Short-term money in shares can crash just when you need it. Match the timeline, and you are never forced to sell at the worst moment.
A worked example
Aarohi needs ₹5 lakh for a car in two years. She is also building ₹50 lakh for retirement in twenty years. The car money goes into a debt fund. The retirement money goes into shares. [illustrative]
How to spot it
- ·a two-year goal invested in shares
- ·retirement money sitting in fixed deposits
- ·asset chosen without asking 'when do I need this?'
Monika Halan · Let's Talk Money