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POSTED BY ON October 11, 2010 12:40 pm COMMENTS (5)
In case we decide to redeem a fund if it is not doing well, how should be deploy the money obtained? Should we invest in one shot or progressively? Or will it be a better strategy to a SWP from the fund not performing well and invest elsewhere using SIP?
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If you are invested with a good financial plan as your base, the money in this current under-performing fund is a part of your portfolio’s equity allocation. SO if you withdraw it in one shot, put it into the other fund in a single shot also otherwise your equity to debt ratio will be skewed for some time.
You could do a SWP to SIP over a period of time,but if you are unsatisfied with the performance of the fund anyways, why bother keeping money in it longer.
If you are coming out of non performing fund , then you should invest entire amount immediately. Because money idle will never fetch anything. You can go for active asset allocation in these market where you can go for fixed %ge for debt and equity. and it case of market rise or fall just maintain the same ratio. It will help you to maximise the value of your fund.
Happy investing.
Viswanath
there is not relation between them . You redeeming something and want to invest the money you get from it are seperate decisions .
If you want to sell something , you sell it anyways and when you get the money treat it as the money like it was there with you , take fresh investing decision .
Manish
Thanks, Manish.
My clarification is related to both in a way.
In a non-performing fund, would you redeem in one go and would you do it “in parts”?
It is standard advice not to invest in the market in one go, but rather in SIP.
Therefore, does it make more sense to do a SWP and then match it with a SIP in another fund.
Your thoughts please.
Invest in one-go only if you are knowledgable enough to understand market movements and can identify where is market right now , else do SIP ,
Same thing with withdrawel , right now I am not sure when markets will fall , but i Know it will in coming months , so if you are high on equities and want to sell , better sell some part every month through SWP
Manish