Redemption should not be tied with Markets Performance

A very simple and clear advice is to remain invested till the time your financial goal is not achieved.

Always remember that the decision of redemption should be connected to your investment objectives and not to market levels.

Fund Managers best to manage your money in such scenario

As a mutual fund investor, it is best not to worry about the market levels. Analyzing market trends and investing money accordingly is the fund manager’s job. When markets are at their peak, the need to redeem shouldn’t cross your mind. Fund managers are supposed to understand market trends better, sell the overvalued stocks and then deploy money as and when markets offer investment opportunities.

Your fund manager may have booked profits on investment and is now waiting for the next suitable opportunity for further investment. Therefore, it is probably better to hold for a while before taking the next step. Fund Managers spend most of their time in research, meeting with company promoters to understand their strategy and business plans which could have an impact on the performance of stocks or markets. In short, your fund managers are potentially in a much better position in understanding markets trends.

There is also a possibility of you not be able to reinvest your redeemed money and may lose out on opportunity which does not happen if you let the Fund Manager manage your money.

Investors who have profitable investments in hands due to recent highs in the markets and now thinking on redemption. We have a question for you! Will you able to be catch a good investment opportunity in the current market especially when interest rates on savings and fixed deposits are falling? Therefore, our advice is continuing your investments with this profit till the time you have not achieved your financial goal.

Redeem only if you have achieved your investment goal!

You may have two reasons for redemption. Either you are worried about the markets levels (markets are at all-time high so may fall down and better book some profit) or you have met your financial goal, investment objective.

If you are looking to book profits then, as we have explained earlier it is better the fund manager do that job.

In second case, if you have achieved your financial goal then you can redeem now. You can spend your profitable investment to fulfill your financial goal like higher education, marriage etc, thanks to outstanding markets performance. Now you can enjoy benefits of long term investments!

One of the best way to redeem your investment is by starting a Systematic Withdrawal Plan (SWP), by doing this you will minimize the risk of redeeming all your money on one day.

To conclude, if you have achieved your investment objective then you can set a new financial goal and start your next long term investment association with markets. If you have not achieved your financial goal, then you should continue with your investments till the time you have not achieved investment objective.