Disinvesting the personal portfolio

You must be aware of the divestment plans of the Government of India, wherein the government has divested its stake in various public sector undertakings (PSUs) and has thereby raised money from the markets.  The aim of the government’s divestment is to augments its revenue for the purpose of development.

Have you ever thought of divesting a part of your portfolio of investments to meet your financial goals or personal aspirations? If you have not yet thought about it, go ahead and do it if you feel the need to. After all, what are investments for, if not to meet your personal aspirations (exotic tourist destination, cruise holiday, etc.) or financial targets (children’s education/marriage, luxury car, retirement kitty, etc.)

In fact, one should consider the process of divestment as a part and parcel of the investment process. The only point is: when to divest your investments? The simple answer is: At the right time! So, how does one know which is the right time to divest? The right time is the time when you need the money for the purpose for which it was invested in the first place!

For divesting your portfolio, you need to have a strategy in place. The strategy could be either to redeem the entire investment at one go and get a lump sum amount, or opt for Systematic Withdrawal Plan (SWP) or Systematic Transfer Plan (STP). This has to be done by redeeming the investments over a period of, say, one year into the bank account (SWP) or by transferring the amount in monthly or quarterly tranches in a debt fund, which will continue to provide stable returns. This way, the investment could be saved from the adverse impact of high volatility at the time of withdrawal.