The world of mutual funds is tricky if you are not focused.  It is not rocket science, but you have to be dedicated to making the most of your investments.  Whether to invest in ELSS, SIP, or other schemes; the choices is always yours. It is still better to go through the option before you make the decision.

Mutual Funds

How To Redeem Mutual Funds

If you are thinking How to redeem mutual funds online, then the good news is that the process is quite easy. And based on the kind of mutual fund you hold, money can get credited to your bank account in a maximum of four to five working days after you submit a redemption request to that specific fund house. It always better to go through the option before you make the decision. The redemption application could get sent at the fund house office or any of the suitable places of acceptance of transactions, across the nation.

Redeeming Mutual Funds

At an annual return of fifteen percent, Rs 15 lakh can be worth around Rs 60, 00,000 at the end of your ten years.  Taking into consideration the same annual rate of fifteen percent, your monthly SIP of Rs eight thousand shall yield nearly Rs 22, 30,000 at the end of the time of ten years. However, it all relies on how much money you presently have in your hand. In case you have Rs 15 lakh to invest, you must ideally drop the money in a liquid fund and begin a Systematic Transfer Plan (STP) over the next fifty weeks.

It would be, Rs 30,000 per transfer. It is the method that would help you to invest your whole money and earn returns from that of the liquid funds on a decreasing balance method.  The amount invested through STP has to be in a diversified equity fund. At the end of fifty weeks, you shall be fully invested in an equity fund. The power of compounding shall work for you on the entire Rs 15 lakh for nine years in an equity fund that should earn higher returns than that of the liquid fund. In case you don’t have a lump sum to invest, then you must adopt the SIP route.

How Can An Investor Redeem Mutual Fund Units?

A unit of a mutual fund can get redeemed on any business day. In the physical mode, investors might require to fill in the requisite transaction slip, and it can be download from the fund house website or that of detaching from the bottom of your account statement.  Whether to invest in ELSS, SIP, or other schemes; the choices is always yours. It is still better to go through the option before you make the decision. The redemption application could get submitted at the fund house office or any of the suitable places of acceptance of transactions, across the nation. Various fund houses also permit online redemptions, and it is through their websites. In case you have invested via an online portal, you might redeem your mutual fund units online as well.

How Do You Know What Is The Amount That Shall Be Credited?

You know it is easy to calculate the estimated value of your investments. It can be done by increasing the number of units you hold on the day with that day’s NAV of that specific scheme. However, it shall be subject to

  • Exit load, in case any for the program and
  • Applicable NAV,’ i.e., the NAV that relies on the day and time when you deposited your redemption request. For example, in case you are submitting your redemption before the cut-off time on any business day, you are permitted to the NAV of the same day. However, you have to note down that securities transaction tax (STT) is valid on the redemption of equity-oriented schemes.

How Long Will It Take For Redemption Proceeds To Get Credited?

Redemption proceeds for liquid or debt-oriented units get paid within one to two working days. For equity mutual funds, the sum is credited inside four to five working days. The redemption proceeds get paid to the investor’s registered bank account provided that the bank branch is allowed for RTGS / NEFT. In case the fund house doesn’t have full bank details, cheques get sent to the investor.

What Charges Or Load Will The Investor Have To Pay On Redemption?

Usually, most of the equity-oriented schemes have an exit load of one percent in case redeemed before a year from purchase. There are even some schemes that have Liquid, or ultra-short-term funds do not have any exit load. So, in case you hold an equity mutual fund, and you wish to redeem before one year, an exit load shall get deducted from the NAV that is applied for your redemption per unit.

 Conclusion

So, the more you know, the better you can perform in the world of mutual funds!