How to withdraw money from mutual funds?
Investments are made so that you can sell off your investments and get the funds from them when you need money.
So, knowing how you would get back the money from your investments when you need it is essential. In this article, we will discuss when you should sell your mutual funds, how to withdraw money from mutual funds, and what points must be kept in mind while selling your mutual funds.
When should you sell your mutual funds?
First, we must understand that mutual fund investments should be held for the long term. Selling your mutual fund units is only recommended if you have achieved the goal for which you had invested money.
But other than that, there can be some reasons why you can consider withdrawing the money from your mutual funds.
These include reasons such as continuous underperformance of the scheme, change of fund manager, no or significantly fewer growth prospects of the sector in case of a thematic fund, in case of unforeseen financial need, etc. Apart from that, it would be best if you do not sell your investments.
How to withdraw money from mutual fund?
The procedure for withdrawing money from mutual funds depends on the mode of holding. Suppose you are holding the units in physical form.
In that case, you can withdraw the money through CARVY or CAMS or even through AMCs by filling out a physical form or an online application on the respective institutions’ websites.
If the units are dematerialized and are in your D-Mat account, then you can sell those investments through your broker.
The process is straightforward in case you invest through the EduFund App. You can go to your portfolio, select the fund you wish to sell, and just press redeem from the three-dot button in the top right corner. After that, mention the number of units you wish to sell or the amount you wish to withdraw.
To sell all the units, check the box ‘Redeem All’. Then continue to select the reason for redemption. After selecting the reason, continue to generate the OTP which you will receive on the registered mobile number, enter the OTP, and after successful verification, the process will be complete.
Depending on the settlement, you will get the funds in your bank account, which varies from T+1 to T+2 days.
Points to be kept in mind while withdrawing money from mutual funds:
It is crucial to consider the following factors while withdrawing from mutual funds.
1. Cut-off timings: The NAV applicable for your withdrawal is determined per the cut-off timings. The cut-off timing differs for different types of schemes. If you request to redeem your units before the cut-off time, you will get the same day’s NAV otherwise next day’s NAV will be applicable.
2. Exit Load: Generally, an exit load of 1% is applicable in case of redemption of equity mutual funds before one year. This discourages investors from short-term investing or trading in mutual funds. So, if you sell your equity mutual funds before the completion of one year, you will have to pay an exit load of 1% of your redemption amount.
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