Start Smart, Exit Smarter: The Untold Side of Investing
We often hear the golden rule of investing — “start early, stay consistent.” While that’s undeniably important, there’s another critical piece of the puzzle that doesn’t get as much attention: knowing how and when to exit your investments.
Your exit strategy can significantly impact your overall returns. Let’s explore this lesser-discussed yet powerful aspect of investing that distinguishes thoughtful investors from those who simply get lucky.
Why the Exit is Just as Important as the Entry
Most investors spend a lot of time figuring out:
- Which fund to invest in
- When to begin
- How much to contribute every month
Yet, many overlook their exit plan — and that can cost them. Exiting too early might cut short the benefits of compounding, while staying in too long could expose your investments to volatility or shifting market risks.
- A good entry gets you in the game.
- A smart exit helps you win it.
Case in Point: Riya and Kunal’s Investment Journey
Back in 2015, Riya and Kunal both began a SIP of ₹5,000/month in an equity mutual fund. By 2022, they each had a corpus of ₹7.5 lakhs.
- Kunal, alarmed by market news, exited in 2022 and withdrew his entire investment.
- Riya, on the other hand, stayed the course after speaking with her advisor. She continued till 2024 and exited with a clear purpose — to fund her postgraduate studies. Her portfolio grew to ₹10 lakhs.
Same start. Same amount. What made the difference? The exit.
When Should You Exit an Investment?
Exiting doesn’t always mean pulling out all your money. It could mean a partial withdrawal, reallocating to a different fund, shifting to more stable assets or meeting your financial goals.
Consider exiting or rebalancing when:
- You’ve achieved your financial goal (like a home or education fund)
- The fund consistently underperforms its peers
- There’s a major shift in market conditions
- You need liquidity due to an emergency
- You’re approaching retirement and need to reduce market risk
Smart Exit Tips to Keep in Mind
- Opt for SWP over lump sum withdrawals
- Begin your exit gradually as your goal approaches
- Shift to safer options like debt funds as needed
- Always let your financial goal guide your exit strategy
Final Thought
Investing isn’t just about making a smart start — it’s about making a wise exit. The best investors know when to stay, when to shift, and when to step out. Let your financial journey be goal-led from beginning to end.
Start Smart. Exit Smarter. Plan with ECS.
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