It is very difficult to time or tame the market. Many people, therefore, choose to invest in Systematic Investment Plans (SIPs) by banks and mutual fund houses as it is a great way to long-term wealth creation.
Choosing the right investment plan for yourself is the first step in deciding if you will receive good returns in the end. However, it is also important to know when to exit mutual funds. Staying invested in mutual funds for more extended periods will indeed get you good returns after the investment duration is over but there are a few situations where you will have to exit before that time period.
Here are some of the occasions when exiting your mutual funds can become a necessity.
It is extremely important to keep track of your investments and to take an informed decision when it is time to exit the mutual fund.
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Consistent poor performance
if your mutual funds are performing poorly continuously over 3-4 quarters, it is time to take a good look at it and exit it accordingly.
Invest in a mutual fund scheme
Rebalancing your portfolio
It is of grave importance to realise when your portfolio needs to be rebalanced in order to make space. This may also trigger you to exit from some existing mutual funds.
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You have achieved your personal financial goal
The main motive of mutual fund investing is to achieve your financial goals in a systematic and planned manner. If that is completed, you are free to exit.
There is a change in the fund manager
If you are discontented with your fund manager’s decision, then exit the fund. You can look for other funds that are compatible with your goals.