When Should I Exit From My Investments?

Greetings !!!

Have received many calls today post market fall. The fall was very much obvious and due basis the data in last few weeks. However, to answer all your questions, I've tried explaining on Exit Plan.

Any time is good time to invest – this sentence has almost become a common parlance for all investors like us and largely for long-term investors – this is true also. But not many are talking about right time to take our money out of investments. Whether you consider redemption as a part of personal finance strategies or as a need – it makes lot of sense to know a thing or two about redemption.

Following 4 things must be considered while making redemption from any investment:

1. Goal is due / Target return is achieved – There are investments which we make keeping a goal in mind (mostly in mutual fund or in bouquet of products). Such investments are ideally to be reviewed and monitored regularly and often get moved to less volatile products as the goal year is coming nearby. Then there are investments which are made keeping a target return in mind (mostly from investments in stocks). Exiting from all these planned investments should be a no-brainer provided you do not get greedy or fearful during such time.

2. Non-performance / Change in strategy – Such decisions often come out of a review meeting where your portfolio is analysed in detail. If certain investments in your portfolio have been consistently lagging in performance compared to peer group of products – then it could be the right time to exit and switch to some better alternatives. Or there may be a change in fund objective or strategy which is not fitting your requirements – then also exiting could be an option.

3. Financial emergency – Despite having a sizeable amount in emergency or contingency fund – there could be scenarios, where taking money out of the investments is the only option - we are left with. In such situations, though considering market level or outlook is secondary – but it is of primary importance to consider – which investment to part with. Consider the potential gain you are sacrificing, tax impact, exit load etc. before finalizing on which product to exit from.

4. Switch (Alternate Process): To make your portfolio more stable and protect the gains, it is advisable to rotate your holdings from Equity to Debt, Gold, International Market and other assest class. Retail investors usually enters in the last leg of rally and becomes long term investor. Idea should be to "Buy the Fear and Sell the Greed". If you follow above, you can become the next Warren Buffet of Investing community.

Feel free to connect regarding your portfolio discussion in coming days on +91 8800 203 200.

Jai Hind. Happy Investing !!!