Investing is a process not a one time step. Many individuals fail to monitor the returns after investment. This can be a bad habit and may lead to loss if not monitored and correction made on time.
It is better to re-balance the portfolio based on the market and your goals. The purpose of investing in mutual fund is to increase returns and it does not mean that holding for a life time will generate good returns.
Here are 7 things to consider before selling your mutual fund units:
1) Falling Market
When markets are falling and you hold lot of investment in equity mutual funds, don't panic. Remember that equity mutual funds are fruit full only if it is held for long term. Make sure you don't fall for this trap and continue being invested.
When you are nearing the goals of the investment, it is time re consider the investment and make changes and sell if necessary. As it may not be helpful holding it for lifetime.
3) Under performance
Consistent under performance of the scheme can be a major factor to consider selling of the units. This should be considered after giving enough time and even if the company fails to meet your target it is better to get rid off the investment.
4) Change in management
If there is a change in the fund and it is not matching its objective and deviation is making your investment riskier.
Returns from the mutual fund attract capital gains tax. It also depends on the type of mutual fund investment. Such as, investment in equity mutual fund schemes are exempt from long term capital gains tax if they are held for more than 12 months.
6) Exit Load
Some mutual fund houses charge fee to redeem mutual fund units. However, it depend on the mutual fund house and investment.