switch/withdraw mutual funds
As the market of Mutual funds is high and most of my equity funds (let us say 'A' funds), reached a new high but some funds like Gold funds (say 'B' funds) have come down. So instead of withdrawing the A funds, should I switch from A funds to B funds to avoid tax as I am withdrawing within a year of investment. Please suggest. more
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When equity market is high, is it not a good idea to switch to debt funds. Because when the market goes down, equity funds fall down more compared to debt funds. I may be charged 1% of my fund value for switching but is that not a good idea. When equity market is low, again I can switch from debt funds to equity funds. This may be a simple question; though, I am asking this with curiosity to know as I am new to mutual funds. more
Jul 14
No, no one can time the market right. What would happen when when you exit but the market still goes higher, or opposite, you buy more at lower level and it still goes down further? So a thorough homework is something most needed. The cost in the shape of taxes or exit loads is important, but is just a fraction of the overall value of your investment. So prime importance should be given to your asset allocation as mentioned by me in my previous comment. Hope you get my point. one more thing, as you are saying you are new to mutual funds, i must clarify that mutual funds are not a new investment class. it is a conduit to participate in different markets, equity or debt or any other for that matter. your funds will perform according to the underlying securities your fund carries. more
Jul 14
Your investments are less than one year old. I believe you must have invested with a long term view. But your question about considering selling or switching within one year of investment throws further questions. It seems you are getting scary just when the market has hit high, what would have been the situation had it been the other way? May be your decision was not backed by appropriate amount of homework. Coming back to your view, your return on equity funds within a year might look very high in annualized %age terms, but might not be too big given your overall financial investments. It is advised to reconsider your stay in the market and base your decision on the actual time horizon, your psychological preparedness to deal with risk, then arrive at an asset allocation i.e. how much % in equity and how much % in debt or any other asset class, and stick to it while re-balancing whenever it goes out of sync. As far as gold fund is concerned, that would automatically be taken care of if you follow your scientific asset allocation as suggested above. Market will always be market and would always keep one guessing. So more important for you would be to know yourself first before knowing the market. You might as well need advice for your hand-holding. more
Jul 13
Dear Praveen: I am unaware on whose suggestion or consultancy you had entered the equity share market via MF route. Normally MF route is for long term investor(s) and not with intent of trading or making profit.
Positively you had ill planned or wrongly advised. If you are scary of the highs/lows then this is not the route or mode.
MF platform is meant for long term investor(s).
If short term or you are scary, debt funds may be a better option, as volatality will not be as high, normally. However all kinds of investments, whichever form, have their own inbuilt and inherent risk. You must carefully read and understand the underlying risk(s) and your mental/financial capability and willingness - both have to be present before entering any market which is termed investment.
All the best. more
Positively you had ill planned or wrongly advised. If you are scary of the highs/lows then this is not the route or mode.
MF platform is meant for long term investor(s).
If short term or you are scary, debt funds may be a better option, as volatality will not be as high, normally. However all kinds of investments, whichever form, have their own inbuilt and inherent risk. You must carefully read and understand the underlying risk(s) and your mental/financial capability and willingness - both have to be present before entering any market which is termed investment.
All the best. more
Jul 14
yes, I was scared that funds may go down as it is reached high. I thought I should withdraw/switch now and invest again when the market is low. more
Jul 14
instead withdraw from B or switch from B to equity balanced funds where u get some safety cushion of debt ( 35%). As gold funds will give return as per gold rates, so no comparison with equity. For equity funds also i recommend switch to balanced funds . No major worries of capital gain tax as no tax on equity or balance funds if holding is more than a year. more
Jul 13
I think switching should be two activities, 1 withdrawal, and 2 investment. So, I feel your action will be same as withdrawal and should attract tax implications accordingly. more
Jul 13
As an investor you are aware that MFs are subject to market risks. Nobody can predict what new highs are!! and what could be next high/low. It is also presumed that as an informed investor you invested not with a view to make money but to let the values (investments) grow. To me, as a consultant and an investor, an optimist of Indian market would not recommend getting out now, for reasons as suggested above by Mr. Ashish Sethi and as an advisor - stay put. If an when markets drop, and if you are confident, it is recommended that you top up and keep doing that. All the best. more
Jul 13
