People do not understand what should be the right strategy to withdraw money. Let us tell today what is the right time to withdraw money from mutual funds. Right timing is very important for better returns and money is not wasted much.
Invest with a Fixed Goal
Whenever you want to invest in equity mutual funds, invest with a specific target and withdraw whenever that target is met. Suppose you need money for your daughter’s wedding and you start investing in equity funds through SIP or lump sum amount. Daughter’s age is 15 years. If you want to collect 25 lakhs in 10 years, then first of all you should have a target in your mind that how much amount you have to collect. If this goal is achieved in the seventh or eighth year. That is, you had thought of 12 percent return for 10 years but you got 15 percent return and your goal was achieved. So this amount should be withdrawn and saved in a liquid fund.
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What to do if the goal is not achieved
Like we mentioned above, what will happen if your goal of collecting 25 lakhs in 10 years is not achieved, that is, by the 25th year you are not able to collect 25 lakhs?
If you have a target of 10 years, then you have to save a little money from the 8th and 9th year, because it should not happen that till the day the money is needed, you have to see the way and at the same time there is a big correction in the market. If the growth of your money decreases, then instead of watching the path till the last minute, you should keep withdrawing money little by little.
Everyone runs after the market then be careful
When there is a boom in the market, people run after it. Every person who does not even know much about the market, also wants to earn money overnight from the stock market. Actually, in 10 years this kind of environment definitely comes two or three times. At such times you should be careful. You should exit after seeing the market environment.
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Jigar Parekh, Founder & CEO, Anchorage Training says, “You can also look at the ratio of PE, PB and market cap to GDP for exit from the fund. This ratio is very high as compared to its average i.e. moving towards all time high, so even in that time you can withdraw money from Equity Mutual Fund. And you can book profits by switching to liquid funds. Remember, if you want to invest for your goal, then you should also know about the exit strategy.
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