People often talk about what mutual fund they should invest in. But, very few discuss when and how to exit a Mutual Fund.
In investment, exit is as important as an entry. Let's see how you can exit a Mutual Fund. A thread 🧵
In investment, exit is as important as an entry. Let's see how you can exit a Mutual Fund. A thread 🧵
Before we discuss exit, ask yourself one question, why did I invest in this MF scheme?
In most cases, the Mutual Funds are goal-based such as child's education, wealth creation, preserve capital, etc.
In most cases, the Mutual Funds are goal-based such as child's education, wealth creation, preserve capital, etc.
Ideally, for a long term goal such as a child's education, you should start withdrawing from your MF 2-3 years before this goal.
You can set up a Systematic Transfer Plan from your goal MF to a safer liquid fund.
Refer to this thread to understand STP:
You can set up a Systematic Transfer Plan from your goal MF to a safer liquid fund.
Refer to this thread to understand STP:
https://twitter.com/finbook_club/status/1430814668289761286
These are some other cases when you should be exiting your MF:
→ At market highs
→ To rebalance your portfolio
→ When your fund underperforms
→ At market highs
→ To rebalance your portfolio
→ When your fund underperforms
When you realise that the markets are in a euphoric phase, you should start withdrawing from your MF schemes slowly.
When your exposure has increased, there's a need to rebalance your portfolio. The first step is to stop your SIPs and gradually move out.
When your exposure has increased, there's a need to rebalance your portfolio. The first step is to stop your SIPs and gradually move out.
When your MF schemes underperform compared to other MFs in a similar category.
You should keep a close eye on this. Review your portfolio once in a while, and stop the SIPs if it is underperforming for 2+ years.
In parallel, you should start your SIP in the other fund.
You should keep a close eye on this. Review your portfolio once in a while, and stop the SIPs if it is underperforming for 2+ years.
In parallel, you should start your SIP in the other fund.
Some common mistakes:
→ Exit during a market crash. It is the biggest mistake one can make.
→ Thinking to exit because of underperformance over a shorter time.
→ Underestimating exit loads and capital gains tax.
Capitals Gains Tax thread:
→ Exit during a market crash. It is the biggest mistake one can make.
→ Thinking to exit because of underperformance over a shorter time.
→ Underestimating exit loads and capital gains tax.
Capitals Gains Tax thread:
https://twitter.com/finbook_club/status/1422590899930861570
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