How should investors protect near-term financial goals from equity market volatility while still seeking reasonable returns?

Wondering how to manage your equity mutual fund investments as you approach a major financial goal, such as your daughter’s marriage or your child’s education? Here’s expert advice, as reported by ET Wealth.

If your daughter’s wedding is expected to cost Rs 40 lakh today, that amount could grow to about Rs 58.6 lakh over the next four years, assuming 10% annual inflation, said Dilshad Billimoria, MD & Chief Financial Planner, Dilzer Consultant.

The expert further said that about a year before the wedding, start gradually shifting the required amount from equity to safer options such as arbitrage funds or low-duration debt funds to reduce market risk.

This shifting to safe options also ensures that gains on long-term equity investments are taxed as long-term capital gains, the expert said.

Alternatively, since you would have remained invested for over a decade, redeeming directly from equity is also a reasonable option, as the likelihood of suffering a negative return over such a long holding period has historically been very low.