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Here are 3 Reasons why you should sell your mutual fund. Visit https://www.investmentz.com to know more!
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Introduction • For all investors having investment plans in India, mutual funds have become the go-to option now-a-days. Investors can easily invest online in upcoming NFO schemes, ELSS tax saving funds, and other mutual fund products through the SIP route. • Many time you think that the market is at an all-time high and your MF has done extremely well, which is why you want to sell your MF to book profits. Sometime you might think the market is down and your MF is giving negative returns, which is why you want to exit the market to avoid future losses. The other common reason people have to sell their MF is when they think their MF is performing below its peers. This could be just for a brief period of 2 or 3 months after which the MF might start outperforming again. If any of these reasons prompt you to sell your mutual funds, then such decisions will mostly back fire.
Goal accomplishment • All your investments must be tied to your financial goals. Thus, one of the best reasons for selling your mutual fund is when you have achieved your financial goal attached to that mutual fund. For instance, let’s say you’ve invested in a liquid fund through SIPs for the short term for 8 months to plan for your foreign vacation. • Once 8 months are complete and you have accumulated the short-term corpus for your vacation, you need to sell you MF and book profits.
Underperforming for a long time • Another good reason for selling your mutual fund is when it has been underperforming for a long time. First try to find out why it has been underperforming for 3 or more quarters back-to-back. If you feel they will be corrected in time, stay invested, else, sell the MF.
Rebalancing due to change in risk profile • Let’s say you started off your MF investment with a conservative risk profile. However, over the years, when you re-evaluate your risk profile, you find out that you are now a moderate investor. Thus, you can take much more risk than before. • Hence, you need to sell your debt-heavy funds and rebalance your portfolio to a 50:50 debt-equity balance.