Is this the right time to redeem your mutual funds?

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Considering the fluctuations in the stock market, several investors are now contemplating redeeming their investment, i.e., withdrawing the money. But is this thinking correct?

So let’s see when you should redeem your fund and when you should not?

First, let’s find out what is the redemption process. Now, you don’t need to fill out long forms and go to the Asset Management Company (AMC) office to redeem your mutual fund investment. After digitisation, the process of redeeming investment has become quite easy. Now, you can simply redeem your mutual fund’s Net Asset Value (NAV), i.e., units, with just one click.

Redemption in mutual funds is a term used to exit a scheme or partially redeem units. Here we will tell you some ways through which you can easily redeem your mutual fund.

The first and easiest way is through the AMC or distributor. Nowadays, most investors buy mutual funds directly through the mutual fund house or through a distributor. All AMCs are providing the facility to buy and sell mutual funds on their website. All distributors also provide this option. You can easily redeem your investment. If you have invested in mutual funds through a demat and trading account, you can place an order to sell your units at any time. The amount received will be credited to your linked bank account.

You can also redeem your mutual fund investment through a Registrar and Transfer Agent (RTA). For this, you will have to contact RTAs like KFintech and CAMS. RTAs are providing the option to download the online form or to redeem the purchased mutual fund from the nearest branch of the AMC.

Keep in mind that there may be a difference in the process of redeeming mutual funds through AMC or a broker. For accurate information on redeeming mutual funds, check the official website of the AMC. If there is any confusion, contact the company’s customer care.

Now the question is when should you redeem mutual funds? Consider three situations – first, when you need money and cannot arrange funds from elsewhere. Second, if the strategy of your fund has changed. Third, if your fund is not performing well. In such situations, you can sell your mutual funds.

Shweta Jain, founder of Investography and a CFP, says, before redeeming mutual funds, ask yourself some questions. Have you achieved the goal for which you invested? If the answer is yes, you can redeem the investment. Similarly, are you withdrawing your investment due to market volatility? If the answer is yes, pause and focus on your goals. Market volatility is not permanent, so you should not withdraw your investment.

If you also want to redeem your investment, there are some important things to know:

– Think carefully about the fund’s performance and reasons for redemption.

– Do not make hasty decisions amid market volatility. Trust the fund manager’s decisions.

– It may take 1-2 days for the money to come into your account after redemption.

– The time depends on the fund’s category. Money from debt and liquid funds comes faster than from equity funds.

– Be cautious of charges like exit loads, as they may vary in each fund.

In such a scenario, you should decide to redeem mutual funds based on your long-term goals. Do not ignore tax liabilities during this time. Many times, people sell their mutual funds due to the need for money or the desire to invest in a better scheme. If you are confused about selling your mutual funds, you can seek advice from a financial planner.