Most of us know when to invest in mutual funds and in which scheme to invest in as well. What is most critical question that we have is when to sell the mutual fund units? How to decide the right time to sell the funds?
If you have acquired 15% to 20% profit already through mutual fund investment, you can sell the units to see profits.
Certain Destination or Financial Goal
Most of us invest in mutual fund schemes for certain goals and plans. For instance, we could have invested it for our children’s educational expense or marriage expenses or savings etc. If we have made the targeted amount of profit as per our goal it is advisable to sell the units and come out of it by seeing a profit.
If you see that your invested mutual fund’s performance goes down it is better to quit. If the funds income is less than the benchmark index and if fund’s approximate income is less for more than one year it is good to get out of the scheme.
Lock in Period
For those who have invested in ELSS funds to save tax will have three years as lock in period. Upon maturity of these three years, it is advisable to sell and get out of the scheme.
If Fund Manager Changes
Each and every fund will yield you profit based on the fund manager’s efficiency. If there is a fluctuation in change of managers from any particular fund or plan, there are chances for the plan’s performances to get affected negatively. In those cases of non-permanent managers, it is good for us to quit from that plan.
If the Fund Company Shifts or Changes
There are high possibilities for the mutual fund plans and performances to see a change when the fund company is being sold or if it gets merged with another company. For now, Fidelity Mutual Funds has been bought by L&T Mutual Fund. Now, those who have already invested in Fidelity Mutual Funds must analyze whether the L&T mutual fund will manage the funds efficiently or not?
When a new company buys our invested (mutual fund) company, we will have to assess whether the new company has proven records of effective fund management in share market or not. In case if that doesn’t have any track record it would be the right time to quit.
When Portfolio Changes
Before investing every investor has to see from their portfolio the percentage of their investments in share market related investments, investment in debt related plans, investment percentage in Gold EDF etc and relate it with factors like age, risk-taking capacity, long-term goal etc. while investing. Upon investing this way based on the above calculations this portfolio has to be changed every year. While reshuffling or rescheduling your portfolio certain funds can be sold.
Like the above when portfolio changes or when a company merges a fund of the same company to another fund, it has to be noticed carefully and if required the units can be sold. For example as per the company’s portfolio it has a fund’s plan to be invested in midcap company shares where as if it changes the investment plan to invest in midcap and smallcap companies shares – our risk factor goes more here comparatively so it would be safe to sell off the units of those funds and quit.
Read the above techniques and advices properly to learn effectively when to sell your funds and to decide which is the right time to sell the mutual fund units to make profit or to avoid loss.