Dear Sreekanth,
I have invested in multiple MF’s and instead of parking money in a FD, I have parked them in Liquid funds (off different MF houses).
I have now started making a STP from those liquid funds to equity or Mid-cap or others.
I have observed that my consolidated Annualized returns rise and fall.(it was 14% before demonetization and 8% after that. which is now grown back to 10%)
So would it be good idea to book profits, by moving the profit from Equity/ Mid-cap to Liquid in one-go (and keep the STP active – so as to keep regularly investing into equity/ mid-cap)
Could this incur a cost ? (in terms of exit load/ short term capital gains)
thanks
Jeevan
4 Answers
Hi,
May I know, why would you like to execute this investment strategy?
What are your investment objectives and time-frame for investing in Equity funds?
Yes, exit loads and taxes on capital gains can be applicable.
Read:
https://www.relakhs.com/mutual-funds-taxation-rules-capital-gains-tax-rates-on-mfs-fy-201516/
Thank you Sreekanth.
"why would you like to execute this investment strategy" -- really not sure.
Just going by the philosophy, "make hay when sun shines".
As MF's are subject to market risks, so treading the market cautiously.
Why stretch one's luck?
"What are your investment objectives" really speaking never formed any (I am just investing surplus money, instead of bank FD) - is there a tool that can help ?
But as you ask:
1. Children's education - 10 years
2. Retirement - in 15 years.
thanks
Jeevan
Dear Jeevan,
As you have two very high priority long-term goals, instead of booking profits, let your investments (STPs) run for longer period.
Opt for Growth option and keep holding on to your investments. But of course, you need to track the performance of your MF portfolio once in a while.
Suggested Articles;
https://www.relakhs.com/mutual-funds-subject-market-risks/
https://www.relakhs.com/retirement-planning-calculator-3-easy-steps/
https://www.relakhs.com/calculate-kids-education-goal-amount/
Hello Sreekanth,
Answering my own question, above.
“why would you like to execute this investment strategy”
- When investing in direct equity (stocks) one needs to track the market, oneself, enter and exit at appropriate times. = you are driving your own car (portfolio), so steer correctly.
- In mutual funds, the manager of the fund is driving the car for you. He/ She is better experienced so trust him/ her and remaining invested, will be of benefit.
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