{"id":24183,"date":"2022-01-05T09:29:27","date_gmt":"2022-01-05T09:29:27","guid":{"rendered":"https:\/\/www.tatacapital.com\/blog\/?p=24183"},"modified":"2024-05-10T11:19:09","modified_gmt":"2024-05-10T11:19:09","slug":"redeeming-mutual-funds-why-when-and-how","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/moneyfy\/investment-guide\/redeeming-mutual-funds-why-when-and-how\/","title":{"rendered":"Redeeming Mutual Funds: Why, When and How?"},"content":{"rendered":"\n

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Perhaps the most crucial concept any first-time investor entering the mutual fund (MF) industry should learn is when and how to make a graceful exit. Choosing the right time to exit a scheme is a critical decision that requires extensive research.<\/p>\n\n\n\n

Often, investors make this decision based on their sentiments if they feel a fund is underperforming or the market is too unstable. However, that\u2019s not the best way to go about it. That\u2019s because even uncertain markets can carry some opportunities that might give good returns. So, what is the right time to redeem MFs and how to do it? Let\u2019s find out.<\/p>\n\n\n\n

What is mutual fund redemption?<\/strong><\/h2>\n\n\n\n

When an investor sells or withdraws their fund units to obtain returns, it is called mutual fund redemption. Simply put, it is the act of exiting an MF scheme and redeeming the units you hold. Redeeming mutual funds<\/a> provides you with an exit route from the investment and gives you the present value of the investment in terms of monetary returns.<\/p>\n\n\n\n

You can either redeem units in parts or exit fully. There are 3 major types of redemption you can opt for:<\/p>\n\n\n\n

    \n
  1. Unit-based redemption<\/li>\n\n\n\n
  2. Amount-based redemption<\/li>\n\n\n\n
  3. Redeem all<\/li>\n<\/ol>\n\n\n\n

    Additional Read – <\/strong>How To Invest in Index Funds in India \u2013 All You Need to Know About Index Funds<\/a><\/p>\n\n\n\n

    When to redeem a fund?<\/strong><\/h2>\n\n\n\n

    Picking the right time to redeem an MF is essential. And it all comes down to the investment goals of the investor. You might have invested in a SIPfor 10 to 15 years to fund your child\u2019s education or for a short-term goal like purchasing a car. So, once you get closer to fulfilling your financial goal, consider redeeming the fund units.<\/p>\n\n\n\n

    Here are a few other valid reasons to redeem your fund units:<\/p>\n\n\n\n