Top three instances when you should consider selling your MFs
In contrast to selling stocks, there are several reasons why you should sell or redeem your mutual funds. What exactly are they? Let us investigate.
People are eager to sell mutual funds and even stocks. People consider selling in two situations: when the price or NAV (Net Asset Value) is rising and when the price or NAV is falling.
When the NAV is increasing, individuals sell out of fear of losing their existing profit, and when the NAV is decreasing, people sell out of fear of incurring more losses. However, there are several aspects that investors should think about before selling.
Periodic rebalancing of your investment portfolio is as crucial as setting your asset allocation. Rebalancing allows you to return to your original asset allocation.
Returning to your pre-determined asset allocation enables you to retain your risk and return stance. As a result, during rebalancing, you may need to sell units of funds that have gone beyond the required weightage.
Assume your fund has been assigned a weightage of 20%. Further, due to movement in the stock market or even the bond market, it increases to 25%. So, in this case, you would need to sell 5 per cent from that fund to return back to your predetermined asset allocation of 20 per cent.
Investing haphazardly proves to be a waste of time. As a result, it is always preferable to relate them to your financial goals in order to obtain an ideal portfolio that would meet your financial goals and risk.
When you attain your objective, you will need the money you have saved. So, in order to spend the collected funds for your intended financial objective, you must sell your mutual fund units.
Mutual fund performance is highly dynamic, and investors may see a variety of factors that contribute to it. It is acceptable for performance to deteriorate owing to external factors such as the economy, stock market volatility, and so on.
However, internal factors such as investing philosophy, internal politics, corporate governance, a change in fund manager, and so on, can have an impact on the performance of the fund. Such funds typically have a low chance of surviving in the future. As a result, selling units of such funds and investing in another fund should be the strategy.
DisclaimerInvestment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.
As India shifts to a greener future, the electrically powered cars and trucks market will rise significantly in 2024. This article investigates the best EV stocks in India, highlighting firms leading the way in innovation, sustainability, and market capitalization.
- Mar 01, 2024Read More
Navigating the many options for banking services becomes a crucial task for both individuals and enterprises as we enter the Indian financial scene in 2024. The top banks in India provide a wide range of services that extend beyond traditional banking, serving as cornerstones of the country's financial stability. These best banks in India offer individualized client care and state-of-the-art digital solutions that reflect the changing needs of the financial industry.
- Mar 01, 2024Read More