If you have invested a considerable amount in mutual funds and are thinking of liquidating them, read on to find out when could be a good time to exit your investments.
“You should never sell your mutual funds looking at market conditions, but you should sell them when you need money or have achieved your target. The main purpose of investing is to reach your goal and this can successfully happen when you stay invested in ups and downs of equity markets,’” said Pankaj Mathpal, MD of Optima Money Manager.
Here are the probable reasons when you can think of selling your mutual funds:
‘’You should remove your money if your targets are achieved or when you are close to meeting your targets and markets are giving indications of being volatile. Like, you have been investing to buy a car for four years and if it has come to an end then you can sell the mutual funds to complete your goal of buying a car or can remove it and switch it to a liquid fund or Fixed deposit till the time you are making your decision,’’ said Mathpal.
Your invest to complete your goals but there are times when uncertainties and emergencies, especially medical, crop up. In these cases, liquidating your mutual fund investments is an option to meet the expenses.
You have made a balanced portfolio of 50% debt and 50% equity mutual funds. But, due to market conditions, the balance between equity and debt funds moved to 70% and 30% respectively in the last few years. So, to be safe in the future, you should sell some amount and reinvest them in certain funds that are falling short in maintaining the balance of your overall portfolio.
In unstable market conditions, fund’s performance is affected. But if the scheme or fund you invested in is not performing well for 6-12 months, but the benchmark and peer funds are performing well then it, you should sell your mutual funds.
You should sell the fund only to switch into another fund if your mutual fund schemes have changed their fundamental attributes and it has been affecting your goals for a while now.
You must have always received advice that you should buy at low and sell at high, but this does not apply to an investor who is doing a goal-based investment in mutual funds as volatile markets help to increase your fund’s performance in long run.
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