If you invest in Mutual Funds, it is also important to know when we should redeem. That is, when to sell the fund or partially withdraw money in it.
Retail investors usually invest in Mutual Funds with a long-term perspective. Experts believe that the investor gets the benefit of compounding along with averaging the market volatility on long-term investments. However, experts advise investors to redeem or withdraw money from mutual funds under certain conditions.
Funds not performing
The fund in which you have invested and it is not performing since last 2 years. The better advice in this is to withdraw money from such funds and invest it in better options.
Redeem in emergency
If you invest in mutual funds. Suddenly an emergency comes and you do not have enough funds, then you can redeem your funds and use the money to meet your needs. However, there is also an advice to consult your financial advisor before redeeming mutual funds. Because if your scheme includes debt and equity funds, then first you should redeem debt funds. Also, you should redeem the underperforming funds first.
Close to investment goal
When you are well on your way to achieving your investment goal, it is a good time to redeem funds. It is advised to invest in debt funds from equity funds, so that the gains made by you are safe and market fluctuations do not affect them.
Consult an advisor
Before you decide to exit the fund or do partial redemption, please consult your financial advisor. This will make it easy for you to understand about the exit load and taxation of the fund. In a hurry, many times a large part of the returns earned from the fund goes towards charges and taxes. (This information is based on a conversation with Wealth Management Company Fintoo CEO Manish P. Hinger.) Disclaimer: This information is based on a conversation with an expert. Make sure to consult an advisor before making an investment decision.
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