Thank you for your view point Sachin.

I have a question, in the above example, does the 20L come out of the 2CR portfolio?

In my case, the wealth creation portfolio goes untouched until I need it to unlock an opportunity. All known purchases are accounted for separately and saved separately.

What I have said applies for equity MF, mainly. When the invested capital is large, and if the markets don’t deliver for extended periods of time, investors may feel like they would have been better off, if they had invested in debt than in equity. This is the reason why for goal oriented investing, rebalancing is suggested, so as to protect the accumulated corpus, particularly when the time is less. If a stock can rise by 15% in a day, it is also true that it can fall by 15% in a day. The allure of 15% in a day, 100% in 6 months is fantastic, but the reverse is also true. This aspect is not made clear to many investors, what goes up will come down is not mentioned as much as, it goes up. GFC decimated wealth, and today’s tech is far more powerful. On the contrary, as Keynes said, markets can remain irrational more than we can remain insolvent. So the music may very well continue for a number of reasons. So a permanent change may have started, as participants are becoming informed.

Stocks are a different thing, as we know. Each company is different w.r.t to the business it is in, growth, valuation, demand etc. And even if majority of sectors are not performing, there could be some activity going on in selected sectors, there is a chance of getting some profits there. And if the PF is diversified, it can perform better even when the indices are down.

I have followed a slightly different approach to decide my spends. for example If my current net worth is 2Cr then I am allowed to buy a car worth 20L i.e. 10% of my current net worth. Similarly for all major spends I decide how far I can go. This way I feel one can indulge without putting their financial health at risk.

% of spends and target corpus etc can be decided at a personal level for e.g. international vacation only after reaching xx amount.

This way you are not depriving yourself of anything and making sure you spend within a comfortable limit for self.

Part of equity markets, and equity being a volatile asset, the higher it goes without a strong base, the quicker the fall could be. Math has limitations in the market, as greed, fear, hope, and another rarely talked about emotion vanity, play a role in delivering the unexpected return, to the upside or downside. Gone are the days, when one can surely say MFs can deliver this much. Market has matured, and tech has done its part too. By one conservative estimate, one cannot expect more than 10%. Hence the inclusion of more capital, and managing it actively, even one chooses passive funds. And as one ages, the concept of opportunity cost starts to be visible, and the charm of equity may fade.

Many interconnected things, and as Buffett said, simple but easy.