What are your thoughts on what to do after an investment period of 5 years? - Seedly
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Personal Finance 101

Investments

Jer Jian

Asked on 19 Nov 2019

What are your thoughts on what to do after an investment period of 5 years?

If an investment is supposed to be held for 5 to 10 years, after those years, do you take your money out, spend and reinvest?

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Hi Jer Jian,

If something is supposed to be held for 5 to 10 years, then after that particular timeframe, I suppose I would be liquidating it if it's not the best option for me at that time. If it's doing well, and I don't exactly need it, I'll leave it alone to grow.

To me, investment can be an indefinite time frame. But if I need the monies, I'll definite pay attention to a good point to liquidate.

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ūüĎć 1
Paridhi Jhunjhunwala
Paridhi Jhunjhunwala, Associate at Kristal.AI
Level 7. Grand Master
Answered on 20 Nov 2019

Hi!

At the maturity of your investments, you basically have 2 options:

  1. If you have an expenditure lined up, say child's education, buying a house etc., you will have to cash out the investment and use the sum accumalated for these purposes. Using this sum for basic expenditure is not recommended.

  2. However, if you don't have any such commitments, you should reinvest the sum to earn some return on it. For this, you should start looking for new investment options before hand, so that you have a plan of investment planned for when the current investment matures.

I work at Kristal.AI, and it's my passion to evaluate various upcoming investment opportunities.

Hope you find this helpful!

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ūüĎć 1

It would depend if you have another investment objective coming up.

If you're investing for a new home for example and plan to build a 50k portfolio but your investments did better than expected and it grew to 60k, I'll take out the 50k for the home and reinvest the 10k balance into another objective like retirement.

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The best way to answer your question is always before you invest, you must know your investment objective, e.g. is the investment meant to be sold, hold onto, or as a hedge against other investment?

Then look at your entire portfolio and create a balanced portfolio that works well together. If it doesn't fit, sell. Whether to spend or reinvest depends on your financial needs then.

If you need the money for other matters, then you cannot afford to reinvest.

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Royalchem
Royalchem
Level 5. Genius
Answered on 20 Nov 2019

Usually reinvest.

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TL
Timothy Lee Yong Kang
Level 4. Prodigy
Answered on 19 Nov 2019

For me, nothing much other than continue to rebalance every 6 months or so cause in long-term investing you are gunning for 30+ years. Furthermore, boring is good in the world of investing. Don't want to wake up to a drop of 30% drop in portfolio value

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