When To Sell Your Mutual Funds?

You can sell your holdings at various occasions depending on your needs and gratification levels. But all of these are determined and guided by solid understanding of the trade backed by your gut feeling.

• Over time, the appreciation in the value of your share could exceed/meet your expectation. Selling at this time in full or partly is advisable.
• You may want to sell when your shares in a mutual fund/s is not performing or is on the decline. Selling at this time may see you loosing some money but can consider selling in order that you stop further loss. In real terms this may not be actual loss if the decline had started after the prices have well appreciated.
• Sell when there is a southward change in the relative performance of your fund. When your fund is underperforming and the peers along with the market in general is up at least by half in a long term scenario, it is time to sell.
• There are times when the objective, size of the fund and the fund manager change. For example if you bought into the fund for its mid cap investments to find out later that it invests in large and blue chip companies, your objectives don't match with that of the fund's. Like wise changing the manager may adversely affect the fortunes of the fund.
• Changes in expenses, particularly in money market funds and bond funds can not be sustained owing to their nature of returns. Higher expenses will eat into your earnings reducing your yield.
• You can also sell when you want to free up money for some other reason. Here it (whether you sell for profit or loss) mostly depends on the urgency of the matter that is demanding money.
• You may not want to remain invested in a particular fund (particularly closed end) perpetually. You can sell, fully or partly when your target price is achieved.

Returns From Investing In Mutual Funds?

Answer to this depends on many factors importantly like your purchase price, your selling price apart from the funds' performance, associated fees & charges and taxes. It also depends considerably on how many shares you have invested in and for how long you remained invested. While the former is directly proportional to your earning the latter has a bearing on the value appreciation. However if this is any indication, there are incidences of certain funds yielding up to 70% of the investment over long periods.

Making money with mutual funds depends a lot on sound knowledge of the market coupled with some street smartness and a little bit of luck as with any other strategically made investment. Paying attention to every small movement and acting wise can really see you making more money than you had thought.

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