Many investors invest in equity mutual funds in the form of SIPs for child education, marriage, car buying, and overseas travel. Anxiety begins when their goal is about a year away.
It is important not only to invest money in mutual funds but also to exit. However, choosing the right entry point can be a daunting task. When exiting a fund scheme, one should consider the risks involved in re-investing, such as transaction fees. Most investors expect to make a profit booking in mutual funds when the markets are at their peak. As well as wanting to minimize losses by coming out as soon as possible even when markets are falling. However, financial planners say that it is not possible for any investor to predict the movements of the markets and that it is likely to go against their strategy. Making a profit booking, Investors should keep in mind that your fund manager will already be taking steps such as taking steps to reduce the risks. They sell stocks that do not bring much benefit in the long run and buy stocks of companies whose performance improves. So whether the markets are rising or falling, there is no need to make a decision on the funds now.
If the fund scheme you have taken out has been underperforming for some time, you need to understand that your investment needs to be reviewed. If the fund does not perform well in line with your investment objective, it may be wise to consult a financial advisor before exiting the fund. Liquidity is higher for open-ended mutual funds. If you need cash for any unplanned expense, then it is natural to look at liquidity and conjugation funds. However, do not move units in investments made for any specific purpose. There may be a tax burden on this, as well as an exit load charge.
Many investors invest in equity mutual funds in the form of SIPs for children’s education, marriage, car buying, and overseas travel. Anxiety begins when their goal is about a year away. At such times the debt fund should convert the liquid fund to a systematic transfer plan, or convert all the cash into a debt fund. Doing so can avoid changes in funds during the volatility of equity markets.
Financial planners advise you to follow the asset allocation rules and review your portfolio annually to make sure that the investments are in line with your goals and to ensure that they are performing as per your risk profile. When equity markets rise or fall .. If your asset allocation changes by up to 5 percent .. No changes are required until then. For example, if you think your equity allocation is 60 per cent, suppose it reaches 70 per cent when the markets grow. Then the portfolio needs to be re-balanced. This requires selling some equity units and converting them into debt funds.
