June 20, 2024

Investment and disinvestment are like two real truth of the life of birth and death. Every investment takes place for the purpose of making the profit, and there is always a peak point when to remove the money from the investment. Just like other investment, mutual fund investment is also a kind. People usually withdraw their money from the mutual fund when the actual return from the mutual fund is not meeting the expectation of the investment. As an investment, you might be impulsive to withdraw your money from the mutual fund due to less return, but along with this, there are many other reasons due to what investors think of dis investing their money from the mutual fund. People should think about the disinvestment in the given situation.

First, When people experience any change in the financial goal, people might get their money withdrawn from the mutual fund if there is any change in the requirement of the money to invest in other options. Second, if an investor experiences any personal need of finance, this situation might arouse in any situation such as illness, marriage or other circumstances and people have no option to meet the in hand situation than the individual will think of disinvesting their money from the mutual fund. Third, People may think o disinvestment of the mutual fund due to relocating their money to other fund option. This decision might be taken when the investor thinks of rebalancing their investment portfolio. The reason behind the thinking of rebalancing the portfolio may be aroused because the present mutual funds are not generating the expected results or may be because of a study of the market about a particular fund. This even happens with top mutual funds. Fourth,This is the situation, in which a person should think of disinvestment of the mutual fund is when the person has set some financial target in the initial time and does not seem to be achieved with the current mutual fund portfolio, in this situation also people may think of disinvesting their finance from particular mutual fund.

Fifth,The situation in which you can think of disinvestment of the mutual fund can arise when there is a change in the fund manager of your fund. A mutual fund is entirely a business of trust and expertise of the fund manager if the company changes your fund manager and you do not have faith in the new fund manager, in this situation also you can think of removing your money from the mutual fund and relocate it to some other options. Sixth, If the money was invested by the people with some particular fund strategy, and later the manager invest the money with some changes in the fund strategy, and you do not find it suitable to meet the initial fund strategy, in this situation, an investor may think of disinvesting your money from the current mutual fund. Seventh, and the most common reason why people disinvest their money from the mutual fund or any other fund, is the financial performance of the investment, people set the goal or decide a bottom line for the financial return on the investment, and it does not seem to be achieved with the investment, then individual or the institutions may think of fetching their money from the mutual fund.

Bottom Line Decision

People are advised to withdraw their money if there is a continuous fall in the value of the fund for a longer time and it does not seem to be recovered shortly. But in all other reason of disinvestment, the investor should evaluate other available options of investment before removing their money from the current mutual fund because removing your money from the current portfolio without evaluating other options may cause lower returns, losses of sitting your capital idle without performing at all.

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