When Should You Redeem From a Mutual Funds

When Should You Redeem From a Mutual Funds

Advice on Mutual Funds is available freely, and there are many advisors so called intelligent advisor which will keep on telling you, where you should invest. But when it comes to redeeming from the investments, it requires a level of expertise, to redeem your investments at right time. Redeeming means right time to take your money from your investment and it is no longer beneficial to stay invested.

There can be many reasons for redeeming, but here are some basic reasons which you should consider while redeeming your money.

1. Have achieved your investment Objective: Mutual Fund investments are made in a long term horizon. Some of the investment objectives include child education, retirement planning, buying a home etc. If you have achieved, your financial goals through your investments you can redeem your money, and in other case, if you have not achieved your Financial Goals then you should stay invested in these schemes.

2. Mutual Fund revises its mandates: Mutual Funds have an mandate in their clause, i.e they used to declare about their investment strategies, about how they are going to manage your invested money. If the fund is not receiving its investment objectives, they are used to evaluate these mandates, and tend to revise them by making some changes in these terms. From your perspective, you will have to evaluate whether the mutual fund with a revised mandate merits a place in your portfolio. If it doesn't, then its time to redeem it.

3. Fund Manger Quits: The intelligent guys who are managing all your invested money are Fund managers. There are many Fund managers who have a fan following. Usually you should invest in a fund depending upon the reputation of Fund house. But if you have invested according to the reputation of Fund manager, and Fund manager decide to move on from that fund in which you have invested, and then it's the right time for you to redeem from the Fund.

4. Mutual Fund is not performing: If you are not getting ROI on your investment, and its performance is below the other funds of same category, then you should take a call on redeeming your money. But before redeeming from a Fund you should evaluate it over a long period of time. Some time because of the external factors, performance is below par performance, but if you are convinced that it is dud, then it's the right time to redeem.

Hope these Points will help you in taking a decision while redeeming your investment.

At the outset, it is important to note that the 'right time to redeem' does not mean that there is a timing element involved over here. Rather the right time to redeem means when the time is up on your mutual fund investment and it is no longer prudent to hold on to it.

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