I took a drop for JEE Mains but couldn’t score well. So, I took admission in a Tier-3 government engineering college in Bihar. The location is very bad—it feels like a village. All my friends are studying in Tier-1 cities like Kolkata or Bangalore, but I am stuck in a government engineering college in Bihar. I couldn’t go outside because of financial conditions. I’m doing B.Tech in CSE here. Now I have some doubts and thoughts: Should I take a complete double drop? Should I go for a partial drop? Should I switch to B.Sc. and prepare for government exams? My age is 21—so is a complete double drop okay at this stage? Also, I don’t have 75% in my board exams. I appeared for improvement but couldn’t score that either. Please guide me, I’m feeling depressed.

Ans: Your disciplined lifestyle and long investing journey are truly inspiring. Starting early and holding investments patiently has created a comfortable cushion for you. Even when the market is falling, your portfolio remains positive. That itself shows the power of long-term investing.

Now your question is about withdrawing profit and reinvesting during the market fall. Let us examine this carefully.

» Understanding What You Are Trying To Do

Your idea is:

– Withdraw only the profit portion
– Reinvest when NAV is lower
– Get more units
– Protect original capital

This approach looks logical on the surface. But in practice it becomes very difficult to execute consistently.

» The Challenge of Timing the Market

To succeed in this strategy two things must happen correctly.

– You must sell at the right time
– You must reinvest at the correct lower level

Predicting market movement precisely is extremely difficult. Even experienced investors struggle with this.

If markets suddenly recover after you redeem, you may lose the opportunity of further growth.

» Impact of Taxes on Withdrawal

Whenever you redeem equity mutual funds:

– Long term capital gains above Rs 1.25 lakh are taxed at 12.5%
– Short term capital gains are taxed at 20%

So withdrawing profit may trigger tax liability. This reduces the benefit of trying to buy more units.

Frequent reshuffling can quietly reduce long-term wealth.

» Your Age and Investment Objective

At 61, your goal should shift slightly.

Earlier the focus was:

– Maximum growth

Now the focus should be:

– Capital protection
– Controlled growth
– Income stability

So instead of frequent buying and selling, gradual portfolio balance is more suitable.

» A Better Approach for Your Situation

Rather than timing the market, consider this approach:

– Keep the core long-term equity investments untouched
– If equity allocation has grown very large, slowly shift small portion into safer assets
– Continue enjoying compounding from existing units purchased at low prices

This maintains growth while protecting accumulated wealth.

» Systematic Withdrawal Planning

If you need regular income later:

– You can withdraw small amounts periodically
– This reduces market timing risk
– Portfolio continues to grow while providing income

This is usually more comfortable for retired investors.

» Emotional Discipline

Your biggest strength so far has been patience.

The temptation to reshuffle during market movements often disturbs long-term success.

Many investors lose wealth not because of bad investments but because of unnecessary switching.

» Finally

Since your investments were made early and units were bought at very low prices, the best strategy is usually to stay invested and allow compounding to continue.

Avoid frequent profit booking and reinvestment based on market movements.

Instead:

– Maintain a balanced asset allocation
– Protect capital gradually
– Allow long-term equity investments to keep growing

Your disciplined journey has already created strong financial security. Preserving that strength is now more important than trying to capture short-term opportunities.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment