You can withdraw unless invested in a fund with a lock-in (ELSS, retirement/child plans). However, each investment amount may be subject to exit load if under the exit load period.
I want to build a pension kitty apart from my investment in EPFO. How can I do that in mutual fund?
– Drubesh Mehta
You may invest using an asset allocation-based approach. Based on your risk profile and time horizon, you may start investing across equity, debt, commodity based mutual funds. During the initial years, the allocation should be tilted towards equity. This equity exposure should be into diversified funds and not concentrated in a single fund house. As your goal approaches, the equity exposure should taper off and be shifted to debt. The debt exposure can be in short duration accrual funds with a high portfolio credit quality such as banking &
PSU debt funds, corporate bond funds. At retirement, you should be predominan-tly invested in debt and may opt for systematic withdrawal of the corpus to meet your income needs. Depending on your corpus size at retirement and financial circumstances, you may have a minimal exposure to equity to boost your portfolio returns. You could also consider investment in National Pension Scheme (NPS). You could choose appropriate asset allocation based on your investment horizon (time to retirement) and risk appetite, as outlined above or opt for auto asset allocation wherein the asset allocation changes and becomes more conservative as the retirement goal nears. It also allows one to select from various pension fund managers across different asset classes.
I am in need of money. Can I withdraw the SIP accumulated for 12 months?
You can withdraw unless invested in a fund with a lock-in (ELSS, retirement/child plans). However, each investment amount may be subject to exit load if under the exit load period. It would be preferable to defer further SIP in order to handle your exigencies, since redeeming existing investments may attract exit load and capital gains tax, if applicable.
Will I have to pay capital gains in equity mutual fund every year?
Taxes are applicable only on realised gains and each unit will be treated indep-endently to determine any applicable gain (short-term or long-term) relative to purchase price.
The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to