Adopt Goal-Based Investing, For Financial Independence & Early Retirement: Smallcase Managers

BANGALORE, India, July 21, 2022 /PRNewswire/ -- Windmill Capital, a SEBI registered research analyst and wholly-owned subsidiary of smallcase Technologies Private Limited, recently launched six target-based smallcases called Horizon smallcases. This will help retail investors on smallcase allocate money towards specific goals for investors who want to achieve between 2030 and 2055. Horizon smallcases' USPs include:

Dynamic asset allocation These dynamic portfolios are built on the philosophy that in the early years one can take higher risks for higher returns, and when one gets closer to the target year investors tend to make more conservative investments. This is done by investing a larger portion into more volatile instruments like equity and gold early on and in the later years balancing it out with fixed income and cash instruments which are safer options.

No mandatory investment amount There's no mandate on how much one should invest beyond what is the minimum price of the assets in the smallcase. One can invest more when extra savings are available, and lesser amounts in the months when not possible.

No lock-in periods or penalties While the smallcase will perform best when it runs its course till the predefined goal year, if for some reason one needs to withdraw money from the smallcase, there will be no penalties.

Transparent investments The asset mix in the smallcases, rebalance of portfolios contain information about what is being sold and bought for full transparency.

Low cost Horizon smallcases are built using low-cost ETFs and with zero subscription fee.

Adoption of such investment instruments for goals such as building a retirement corpus is the most efficient way for an investor to use goal-based investing for financial independence and possibly even early retirement, according to smallcase managers.

Ashwini Shami, smallcase manager & EVP, Omniscience Capital says,"Retirement planning can help attain financial freedom after formal employment ends. An alternative source of income from one's investment portfolio can take care of lifestyle expenses and longer-term financial commitments. Building a retirement corpus requires capability to save and invest in asset classes such as equities with a long-term orientation."

smallcase managers suggest considering the following elements to start building a retirement framework:

Time Horizon - Since retirement planning is essentially investing money, the sooner one starts the better it is. The longer the runway, the greater the flexibility in one's retirement portfolio. This requires identifying the age at which one would want to retire.

Spending Pattern - While it is not possible to determine exact post retirement expenses, having a rough estimate is sufficient. As per spending estimates, one should focus on building a retirement portfolio against risky and safe assets. This will also assist in deciding on the amount of money needed to build a retirement portfolio.

Risk Appetite - When one plans for retirement, the mindset is usually tilted towards risk aversion. It is imperative to define one's own risk appetite when it comes to a retirement portfolio. It helps in setting the return expectations accordingly.

Professional guidance helps in building a retirement plan as the most challenging part of a plan is to stay invested. Staying on course in spite of financial/ politically volatile events such as global financial crises, pandemics, wars, etc. is easier with a manager's help.

"In the case of retirement, professional guidance helps a lot. with regard to taking into account aspects such as tax efficiency and an ideal asset class mix. Therefore, taking professional guidance is the best way to go about it," says Abhishek Jadon, smallcase manager & VP, Windmill Capital.

PGIM's Retirement Readiness Survey 2020 pointed out that only 52 percent of the respondents knew how much they needed for retirement. Life expectancy in India grew from 62.5 in 2000 to 70 years now and is expected to reach 80 years in the next few decades. Therefore, a person retiring at the age of 60 has to plan for at least 20-25 years of retirement.

About smallcase: smallcase is a financial technology company building a platform for direct indexing & model portfolios of stocks & ETFs known as smallcases. In the last six years, smallcase has developed an ecosystem of 350+ businesses in the capital markets space. The ecosystem includes some of India's prominent financial institutions and brands that leverage the smallcases platform & technology. Over 6 million investors use smallcase products and apps every month. Headquartered in Bengaluru, smallcase has more than 300 employees across engineering, product, business, and growth functions. Download the smallcase app here

(PTI)